Greg Wright: Small firms still need tough regulators

When you’re not being throttled with red tape, or mis-sold fiendishly complex financial products, you’re being ripped off by overseas competitors who are flooding the market with woeful “copycat” versions of your products.

This might sound a jaundiced view, but it will “chime”, to use corporate-speak, with many of our readers, who feel the odds are still stacked against them.

Let’s start with the interest rate swap mis-selling scandal which continues to rumble on.

Some victims of this scandal have seen their business destroyed. Many victims have been campaigning for justice for almost five years.

There are some who would argue that it’s time for regulators to stop bashing the bankers. Some say that clobbering the banks with hefty sanctions for misdeeds will stop them from helping small businesses today, who desperately need their backing.

Yesterday, HSBC warned that regulators’ zeal to punish wrongdoing was putting its staff off taking reasonable business risks. Industry sources have warned of unintended consequences from the regulatory clampdown, including the possibility that lending will be cut to people or businesses in poorer countries.

These are valid points. But who was responsible for the breakdown in trust which led to these sanctions?

British banks, as the Bank of England recently observed, have a dreadful record when it comes to mis-selling complex interest rate hedging products.

Before the financial crisis, many businesses bought the products to protect against interest rate rises, but they ended up facing crippling costs when the Bank cut rates to a record-low in response to the financial crash.

Last year, the Financial Conduct Authority ordered Barclays, Royal Bank of Scotland, HSBC and Lloyds Banking Group to investigate nearly 30,000 cases of potential mis-selling.

By mid-July, the banks had paid out just a third of the £3.75bn they had set aside to pay compensation. That is nowhere near good enough.

Anthony Browne of the British Bankers’ Association recently said that “a huge amount of necessary work has been done to reform and repair” the banking sector since 2007, and that process needs to be completed.

Mis-selling victims won’t regard that process as anywhere near complete until they are compensated in full, and the individuals responsible for these shameful acts are punished. Small firms need tough regulators who can take on bankers who have a vast array of resources at their disposal.

Which brings me to another injustice which crossed my desk this week.

I heard from Jason Mace, the MD of Rotherham-based Gala Tent, who believes the authorities must act to stop inferior “copycat goods” from reaching British consumers.

Mr Mace said he has experience of Far Eastern companies setting up websites and online shops that imitate credible companies such as Gala Tent.

When the goods arrive, they are often of terrible quality, but there is usually no return address or way of seeking a refund.

Mr Mace added: “There needs to be greater legislation to prevent fake goods companies piggy backing off the hard work and investment of British manufacturers, a bit like the laws that have been brought in to protect recording artists from being ripped off.”

Anyone who suspects they might have bought counterfeit goods should contact Citizens Advice or Crimestoppers.

With its vast powers, surely the EU can devise a strategy to stop rogue companies who prey on these honest traders?