A cross-party group of MPs brought a special debate on the issue of the potential mis-selling of complex interest rate swap products by high street banks to small businesses to Parliament on Thursday 21st June.
Conservative MP Guto Bebb initially raised the issue in Parliament back in January, calling for a debate on the potential mis-selling of these complex interest rate swap products and urging the Financial Services Authority to look at this issue in more detail.
Following this, the Financial Services Authority has announced that they are carrying out an investigation into the way these products are sold and the issues raised by Mr Bebb. The Aberconwy MP is also calling for the Treasury select Committee to carry out an investigation into this issue.
Guto Bebb said: "Last week's meeting and the subsequent debate has been useful in discussing the issues with other MPs and also raising awareness of the potential issue amongst colleagues. I am grateful to Stuart Brothers from SRB Legal and also to Stephen Rosen partner of Collyer Bristow, for coming to Parliament to set out in more detailed legal perspective the complexity of these products and some of the legal problems involved in claims being brought forward. I am also very grateful for colleagues who spoke in the debate and the many more who I know support what we are doing but could not be in the Chamber last Thursday afternoon."
He added: "In light of the ongoing Leveson inquiry, it is refreshing to see responsible journalism which has helped draw these issues to light. As an MP, I feel it is my responsibility to report the growing number of complaints to fellow MPs as well as highlight these to the appropriate regulator. As part of the campaign, I am working with the Federation of Small Businesses, the British Hospitality Association and the organisation Bully Banks, who have identified a number of complaints.
Commenting on the FSA announcement of investigation, Winchester & Chandler's Ford MP Steve Brine said: "The Treasury have shown interest in the issue and are working with the FSA to ensure there is a full enquiry into the issue. Obviously I am extremely supportive of this inquiry but I hope it can report with a conclusion which sees these small businesses seeing some meaningful redress.
"Of course there may be circumstances where these products were sold to businesses who understand the risks, but in some cases it is up to small businesses such as hotels and chip shop owners to seek costly legal redress. It is surely the role of the regulator to protect consumers. If such claims are substantiated on a wider basis then the exposure of the banks could be comparable to, if not greater than, the PPI liabilities."
The issue first came to light when Mr Bebb was contacted by Colin Jones who had lost his hotel and has now been declared bankrupt as a result of what he says is being mis-sold a highly complex interest rate product by tax-payer owned RBS. One of the common criticisms levied against the banks is the alleged failure to fully explain the product and the portrayal of the rate swap products as being akin to fixed rate mortgages, when margins above the base rate are able to fluctuate. This product in some cases has lead to losses to businesses and individuals of thousands of pounds and into spiralling debt.
Mr Brine has also been contacted by constituents on the issue living in his Winchester constituency.
More information...
You can read the debate on Hansard here.
If you have been sold an IRSA or SWAP contact Bully Bank via www.bully-banks.co.uk if you need some help, and just as importantly send details of your case to the FSA urgently.
some help and as importantly send details of their case to the FSA urgently