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22 October 2012

FSB welcomes Opposition commitment to mis-selling

Reference number: PR 2012 34

FSB News Release
PR 2012 34
 

FSB welcomes Opposition commitment to mis-selling

 
The Federation of Small Businesses (FSB) has welcomed the support of Ed Miliband MP for small firms that believe they have been mis-sold complex financial products, backing the FSB''s call for a moratorium on payments and an independent scheme.
 
With only two days remaining for the FSA''s pilot redress scheme, the FSB remains concerned that the banks which sold the products will be the ones to decide if they were mis-sold to small firms. Coupled with this, the FSB also wants a moratorium on swaps payments to prevent more firms going to the wall.
 
The FSB has written to the Chancellor, George Osborne MP, detailing its concerns about the lack of transparency in the current redress system which is being piloted by the FSA. The business organisation has called for a system which is run independently of the banks to ensure each business is treated fairly and with a consistent approach.
 

In an interview with the Sunday Telegraph, published 22 October, the Leader of the Opposition said that he was to call for a meeting to tell the FSA to act faster on mis-sold swaps.

 
John Walker, National Chairman, Federation of Small Businesses, said:
 
"So far small firms have had to wait almost four months for any redress since the FSA made its initial ruling that some businesses were mis-sold products. During this time, they''ve had to continue to meet payments and many have gone to the wall. We want to see a moratorium in place – especially if this is to drag on – and think that an independent scheme would have made quicker decisions.
 
"The FSA is approaching the end of its pilot scheme, but we believe it isn''t too late to change tack. Small firms currently have little confidence in the banks. To ask the bank that mis-sold the products in the first place to judge if it was fair will be met with disbelief. With estimates that around 40,000 businesses could be affected, it is time to take this out of the hands of the banks and put a fully independent system in place."
 
ENDS
 
Notes to editors
 
1. The FSB is the UK''s leading business organisation with around 200,000 members. It exists to protect and promote the interests of the UK''s Real-Life Entrepreneurs who run their own business. More information is available at www.fsb.org.uk
 
2. In the FSA''s proposed redress scheme, the FSA has agreed with the banks a system which involves the banks writing to businesses which have been sold IRSA products, assessing their situation and then assessing redress. This will be overseen by a primary independent assessor, with a secondary assessor on hand if there is a conflict of interest. The whole system will be overseen by the FSA.
 
3. The FSB is calling for a system with the following five principles:

• Scope: clear and objective rules agreed by the banks, the FSA and the business community which assesses eligibility and bars those ineligible for compensation at a very early stage
• Fair: The scheme must be separate from the banks which mis-sold the products, with a full appeals process if the claimant is turned down to avoid legal action
• Swift: Small firms are still paying very high amounts of money for these products, impacting cash-flow and in some cases costing jobs
• Transparent: The current scheme does not show the type of transparency that small firms need to ensure they are being treated consistently and fairly
• Right to appeal: The appeals process must be clear and not go through the legal routes

 

 

Media contacts

 
ISDN is available for media interviews.
 
Liesl Smith: 020 7592 8128 / 07917 628926 liesl.smith@fsb.org.uk
Sara Crane: 020 7592 8113 / 07595 067068 sara.crane@fsb.org.uk
 
For regional FSB contacts please go to www.fsb.org.uk/regions