MPs call for Government to help SMEs in bank 'mis-selling scandal'
Toby Perkins, shadow small business minister, and Chris Leslie, shadow Treasury minister, have called for the Government to take urgent action against growing claims that mis-selling by banks has driven many small businesses to the point of bankruptcy.
It has been speculated that thousands of small businesses may have been mis-sold the complex financial products known as 'swaps' - an insurance that protects businesses against rising interest rates. In many cases SMEs have said that they were not given full information or were unaware they had even purchased the product which is usually sold to much larger corporations.
Writing in the Sunday Telegraph, the Labour MPs are proposing that changes be made to the Financial Services Bill to make it easier for groups of small and medium sized enterprises (SMEs) to bring collective proceedings before the court. Doing so would align the rights of SMEs to those consumers who were compensated for mis-sold PPI products.
Writing to business secretary Vince Cable and Treasury minister Mark Hoban, the opposition MPs have urged them to ensure the Financial Services Authority (FSA) carry out a thorough investigation into the alleged malpractices.
A group of 20 MPs met with businesses and their lawyers last week to discuss the mis-selling that may have occurred.
The MPs' article read: "Businesses are telling us that the heavy downside costs they face as a result of the current Bank of England base rate situation are paradoxically pushing otherwise healthy businesses to the brink of bankruptcy."
"The stories of the way these products were sold, the paperwork that accompanied them and the terms and conditions attached come from too many different sources to be dismissed as coincidence or carelessness."
The MPs are asking the Government to bring the proposed changes in law before the House of Commons within the next three months and to give SMEs the right to complain about mis-selling practices to the Financial Conduct Authority (FCA), a new Government consumer protection authority.
The FSA is currently investigating the claims with the initial review expected to be published in May.