Norfolk businessman says he feels vindicated in his fight against the banks following watchdog ruling on interest rate swaps
PUBLISHED: 20:52 31 January 2013 | UPDATED: 14:47 01 February 2013
Archant Norfolk Photographic © 2012
A Norfolk businessman who spearheaded a campaign against the banks over interest rate swaps said he felt vindicated yesterday after a watchdog ruling found that the vast majority of financial products were mis-sold.
Britain’s biggest banks will begin the process of compensating thousands of small businesses after a review found more than 90pc had been mis-sold complex financial products.
UK lenders are expected to face a compensation bill of at least £1bn in what marks the latest in a long line of recent scandals to hit the sector.
Paul Adcock, managing director of Watton-based retailer Adcocks was left with bank charges of £175,000 –rising to more than £220,000 – after signing up to an interest rate derivative scheme promoted by his bank, Barclays, as a means of protecting business borrowers from spikes in interest rates.
Mr Adcock was not alone and it is believed that as many as 40,000 interest rate swaps could have been mis-sold to small businesses by banks, including RBS, HSBC, and Lloyds Banking Group, since the end of 2001.
With the business battling to meet the repayments Mr Adcock became a leading member of the “Bully Banks” campaign of businesses taking the fight to the banks.
“It’s certainly a positive step in the right direction, and it’s certainly vindicated our stance,” Mr Adcock said. “It’s been really upsetting to hear so many desperate cases from other businesses, and if I hadn’t had the distraction of the campaign, I don’t know what I would have done. We are not popping open the champagne yet, but hopefully it will come up trumps.”
He added that while he was still pressing for compensation from Barclays, his relationship with the bank had improved, and it had since suspended the interest repayments as well as offered a new overdraft facility helping to keep his business going.
“Hats off to Barclays,” he said. “They have been more helpful and they also threw us a life-line in the form of an overdraft. If that hadn’t happened, we would have gone.”
The FSA, which had previously found “serious failings” by the banks confirmed that Barclays, HSBC, Lloyds and RBS would start a full review of their sales of interest rate hedging products (IRHPs) to small businesses.
It also been reviewing sales of interest rate swaps by Allied Irish Bank, Bank of Ireland, Clydesdale and Yorkshire banks, Co-operative Bank, and Santander UK. It expects to confirm by February 14 that these banks can launch their own reviews.
And it said it was changing its eligibility criteria for those who could be in line for compensation so that small businesses and farm businesses, which had previously fallen foul of the rules may be able to make claims.
Martin Wheatley, CEO designate of the Financial Conduct Authority, said: “Small businesses will now see the result of the review as the banks look at their individual cases.
“Where redress is due, businesses will be put back into the position they should have been without the mis-sale.
“But it is important to remember that this review is firmly focused on the particular circumstances of each sale.
“These will determine whether there were failings in the sales process and, if so, whether redress is due.”
The Federation of Small Businesses (FSB) said the findings were alarming but would also come as a relief to the thousands of small firms who have been waiting for clarity on the situation.
FSB chairman John Walker added: “Now the pressure is on the banks to contact its customers. They must do so quickly and decisively to draw a line under this matter and bring the situation to a close.
“This review only covers the first four banks, with the report into the remaining seven due in the coming weeks. The FSB will continue to fight for other firms caught up in this scandal.”