'Swaps' mis-selling: Welsh firms still failing despite compensation scheme
- 24 October 2013
- From the section Wales
Welsh businesses are still failing six months after a scheme was set up to compensate them after they were mis-sold financial products, claims an MP.
Aberconwy Conservative MP Guto Bebb, who is leading a commons committee on the issue, said millions were being spent administering the scheme.
But he said the money was not getting through to businesses which had suffered huge losses.
The Financial Conduct Authority (FCA) said cases were being speeded up.
Victims claim they were not made aware of the risks of interest rate swap agreements (IRSAs) which are commonly known as swaps.
"We still have businesses who are failing, not because they made the wrong decision but because they were mis-sold an inappropriate product and we really do need to get the FCA to simplify and move ahead at a much quicker pace," said Mr Bebb.
About 40,000 businesses across the UK are thought to be affected.
Some people attended a rally at Westminster before a Commons debate on the plight of small businesses on Thursday, including Pembrokeshire farmer Carwyn James who is owed £180,000 by Barclays.
He is critical of the attitude of banks, not just for selling him the swap in the first place, but also for the way they kept on charging him extra banking fees while he was in trouble.
"There was conscious process of piling it on, waiting for us to pop," Mr James said.
"A short-term money-making attitude, that is the worst thing they have done, instead of helping businesses they finished them. We were at their mercy and it was open season."
In response, Barclays said it had built a quick and clearly defined "consequential loss assessment process" which was now in full swing.
"If a customer submits a claim within 40 days of their redress offer, we will review and provide them with a final redress offer within 28 days of receipt of their claim," said Barclays.
"We would encourage those who haven't yet responded to do so shortly so that their reviews can commence."
Federation of Small Businesses (FSB) Wales spokesman Iestyn Davies said the swaps mis-selling put businesses under an unbearable strain when they were also struggling with the recession.
"Businesses have closed, they've gone to the wall and failed.
"But, more importantly, individuals' health has suffered, relationships have suffered and there has been lasting damage done as well to the credibility banks have as trusted advisors to small businesses," he said.
"These actions were immoral they were probably illegal but more importantly they are things which have caused people to be damaged as individuals.
"We need them to have the redress they deserve to be put back in the position they were in before these products were sold to them."
The FCA said cases it hoped most would be reviewed by the end of the year.
It said it was encouraged that some banks announced this week they would start paying compensation in separate stages - effectively fast tracking compensation payments.