Banks urged to move faster on mis-sold interest rates

Help

The government has backed MPs in calling for swifter action on mis-sold interest rates from the banks.

Mis-selling of interest rate swap derivatives was the subject of a backbench business debate introduced on 24 October 2013 by Conservative MP Guto Bebb.

The motion, tabled by a cross-party group of MPs, decried the progress made on a redress scheme set up by the Financial Conduct Authority (FCA) as "unacceptable".

The deals were meant to give borrowers security against rising interest rates but with rates at an historic low many businesses saw their payments soar.

A redress scheme set up by the FCA to review 30,000 cases in July 2012 has resulted in only 32 businesses receiving compensation to date.

"I'm not looking for a new redress scheme, but I am looking for changes and much greater speed within the redress scheme that we have," Mr Bebb said, adding that he felt certain business owners had been "taken advantage of".

Labour MP Pat McFadden, who served on the Parliamentary Commission on Banking Standards, spoke of a pattern of banks displaying "a refusal to face up to responsibility, followed by increasing anger in the customer base and destruction of trust".

Ian Swales, a Lib Dem MP and an accountant, said: "Small businesses should've had independent financial advice, because the bank was no longer on their side."

Shabana Mahmood, a new member of Labour's shadow Treasury team, the "number of claims settled to date is pitifully small".

She called small businesses "the lifeblood of our economy" and stressed that "they deserve to be treated better by financial institutions".

Responding for the government, Financial Secretary to the Treasury agreed: "The banks should move much faster. The announcement today by these two banks are welcome but other banks should take a much more serious attitude to the timing of redress payments and not just amounts."

He did warn, however, that there should be a cut-off point where "more sophisticated businesses" accept responsibility for understanding what was sold to them.

MPs agreed to the backbench business motion without a vote.

Copyright © 2017 BBC. The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.