Thousands of West firms could qualify for compensation running into millions of pounds after being mis-sold complex interest-rate protection schemes by their banks, according to a regional finance expert.
David Cornelius, banking services partner at West accountancy firm Bishop Fleming, which has an office in Bristol, says 3,000 businesses in the region could be affected – and for many the impact of the mis-selling scandal has been financially cri
ppling.
“Good businesses in this region have been brought down by having to suffer the financial penalties of these interest-rate hedging schemes that exposed them to huge costs when interest rates plummeted,” he said.
Earlier this week RBS was fined £390m by UK and US financial regulators for manipulating the interest rates banks pay when they borrow money from each other. The fines follow earlier action against Barclays and UBS.
More banks are likely to face similar fines. Mr Cornelius points out that reviews into Allied Irish Bank, Bank of Ireland, Clydesdale & Yorkshire Bank, Co-Operative Bank, and Santander UK will begin very soon.
And with the Financial Services Authority (FSA) reporting that 90% of interest rate hedging products it has reviewed were mis-sold, many firms need to be compensated.
“I hope that we shall now see speedy action by the first tranche of banks examined by the FSA – Barclays, HSBC, Lloyds, and RBS – in sorting redress for businesses that have already spent too much time and money on this scandal,” said Mr Cornelius.
The FSA examined 173 sales of these complex ‘swap’ products to non-sophisticated customers and found that more than 90% did not comply with a least one or more of the regulatory requirements.
As a result, the FSA is now focusing on small businesses that were unlikely to understand the risks associated with these products.
“Many of these businesses may have expired before the swap did or, at best, survived under sufferance until the swap terminated,” he added.
Bishop Fleming – the UK's fastest growing Top 50 accountancy firm according to Accountancy Age – has offices in Bristol, Bath, Exeter, Plymouth, Torquay, Truro and Worcester.
