Our regular followers will know that we have been keeping an eye on this issue for some time – here’s an update.
More than two years after a scheme was set up to help SMEs recover from bank mis-selling of Interest Rate Hedging Products a Bully Banks conference earlier this month has condemned the redress scheme.
Bully Banks was set up to support SMEs and to lobby for redress for their losses to restore them to the position they had been in before being sold IRHPs.
Many business owners at the conference reported that the scheme, administered by the FCA (Financial Conduct Authority) was failing to deliver. The FCA was described as “indifferent”, unaware and complicit in its handling of the banks under the scheme.
Bully Banks reported that “only 400 SME customers have had consequential loss agreed and those for a derisory £1,800 per customer”. They also reported that more than 35% of those seeking redress had been excluded on the grounds that “they should have been knowledgeable enough to see through the bank’s deceit” and that many thousands of SMEs have become insolvent as a result of the mis-selling. Cynics might argue that some insolvency procedures were initiated by the banks to avoid paying out or being pursued for mis-selling.
Given that plenty of politicians, economists and senior figures in finance were caught out by the onset of the 2008 financial crisis, in which mis-sold complex and incomprehensible financial products played a significant part, and are still struggling to make meaningful reforms to prevent a repeat it is a bit rich that 35% of SME owners are being penalised for a failure to understand the implications of some of those same products.