Firms fear ‘watered down' compensation ahead of rate swap mis-selling announcement

28 January 2013 by
Firms fear ‘watered down' compensation ahead of rate swap mis-selling announcement

Small hospitality businesses affected by the mis-selling of interest rate swap agreements have voiced their fears that they will not receive the level of redress to which they believe they are entitled, under a Financial Services Authority (FSA) scheme.

The FSA is due to announced the pilot review of around 50 sample cases of mis-selling later this week, on Thursday 31 January.

As part of its findings, it is expected to set out a basis for "fair and reasonable" redress for businesses affected by the mis-selling, which is designed to ensure that those who can prove they were mis-sold one of the complex financial products, designed to protect them against interest rate rises, are left no worse off than if they had never taken one.

But Bully-Banks, an organisation formed of some of the 40,000 SMEs thought to have been affected by mis-selling of interest rate swap agreements, warned that they expected the FSA to limit redress for those affected, as a result of pressure from the Government and banks. Around 5,000 of those 40,000 businesses are thought to be in the hospitality sector.

Bully-Banks warned that failure to properly compensate businesses could lead to a wave of litigation.

Commenting on his concerns ahead of the forthcoming FSA announcement Jeremy Roe, chairman of Bully-Banks said: "There is a lot at stake here for the banks and also for the Government who are stakeholders in both RBS and Lloyds.

"We are concerned that there are those in Government and in the banks who seek to reduce the scope of the FSA Scheme merely because of the fear that the scale of redress will damage the balance sheet and share price of the banks."

"We believe that the FSA is fully aware that the banks mis-sold these products. We are concerned that they may be pressurised into modifying their views and not being allowed to act with the rigour that is required of effective regulators. If this is the case this is a major political scandal in the making."

"The Government's role is to support the regulator it has appointed not try to minimise the scope of that regulator's findings."

The FSA confirmed that its announcement was still scheduled to take place on 31 January but declined to respond to Bully Banks' claims until its findings were revealed.

Independent operators struggling to repay ‘mis-sold' interest rate hedging products >>

MPs hear of delays to FSA's review of interest rate swap mis-selling >>

By Neil Gerrard

E-mail your comments to Neil Gerrard here.

If you have something to say on this story or anything else join the debate at Table Talk - Caterer's new networking forum. Go to jobs

Looking for a new job? Find your next job here with jobs

Blogs on ]( Catch up with more news and gossip on all Caterer's blogs
[E-Newsletters]([ For the latest hospitality news, sign up for our E-newsletters
The Caterer Breakfast Briefing Email

Start the working day with The Caterer’s free breakfast briefing email

Sign Up and manage your preferences below

Check mark icon
Thank you

You have successfully signed up for the Caterer Breakfast Briefing Email and will hear from us soon!

Jacobs Media Group is honoured to be the recipient of the 2020 Queen's Award for Enterprise.

The highest official awards for UK businesses since being established by royal warrant in 1965. Read more.


Ad Blocker detected

We have noticed you are using an adblocker and – although we support freedom of choice – we would like to ask you to enable ads on our site. They are an important revenue source which supports free access of our website's content, especially during the COVID-19 crisis.

trade tracker pixel tracking