Action in wake of interest rate swaps scandal debated by MPs

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Media captionColin Jones: "The redress scheme has gone on too long"

Concerns a scheme to help business people mis-sold complex financial products by banks is failing those who lost the most will be debated by MPs later.

Banks accept that many small and medium sized firms were wrongly sold interest rate swaps on top of business loans.

They reached a voluntary scheme with the regulator, the Financial Conduct Authority (FCA), to repay billions of pounds to those who lost money from the mis-selling scandal.

The banks and the regulator argue that it is working but many of those who lost their businesses after they bought one of these products say they are not being fully compensated.

Signs of problems started to emerge when people discovered that they were paying more in interest on their loans despite the fact that interest rates were falling.

Some subsequently went out of business, leaving their owners facing ruin and their employees without their jobs.

Colin Jones ran a bed and breakfast in Llandudno and owned a number of properties.

His businesses were worth around £2.5m and employed up to 30 workers.

When the bank repossessed his B&B, Mr Jones's 82-year-old father was still resident in the property.

"The redress scheme has gone on too long," he said. "It is solely and wholly a whitewash."

£1.5bn paid out

Campaign groups like Bully Banks believe around 38,000 small and medium-sized businesses across the UK were affected - often businesses such as care homes, caravan parks, hotels and farms.

The voluntary redress scheme is supposed to ensure those who were mis-sold would be put back to the position they were in if they had never had the financial product in the first place.

It has two parts: First the banks assess whether it mis-sold the swap and then decides on compensation for the swap payments.

Secondly, the bank will assess a claim for what is called consequential loss or the knock-on effects of the swap on the business such as the loss of their companies and livelihoods.

Aberconwy MP Guto Bebb, who chairs a parliamentary group on interest swap mis-selling, is concerned the scheme is failing to return people to where they would have been without the product.

Those concerns have led to a debate being called in the House of Commons.

According to the FCA, around 10,000 customers have accepted a redress offer and £1.5bn is being paid out. This means that, so far, 71% of offers have been accepted.

Banking industry representatives accept the industry did things wrong and they argue they are working hard to offer fair and reasonable redress.

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