Chris Leslie MP, Labour’s Shadow Treasury Minister, reacting to the FSA compensation scheme established for firms mis-sold interest rate hedging products, said:
“Small businesses have been let down badly by the big banks – and the Government must act to ensure they get a better deal. The revelation that banks may have breached regulatory requirements in over 90 per cent of sales to small firms is astonishing – another example of banks putting profit ahead of their customers’ best interests.
“The FSA compensation scheme is welcome, but needs to extend to all the banks potentially involved in mis-selling. It is worrying that the FSA say it may take longer than six months for compensation to be forthcoming – and that it will be left to the banks themselves to grant a moratorium on payments while cases are being determined. It is also disappointing that no clear appeals process has been created for firms who dispute the findings of the ‘Independent Reviewers’ of mis-selling cases, especially as these reviewers are appointed by the banks themselves.
“The banks need to listen to the anger of small firms and change their approach to high commission sales such as these. And the Government need to learn the lessons of this saga and take heed of the recommendations of the Parliamentary Banking Standards Commission who are wary of the Chancellor’s plans to water down the Vickers recommendations and allow derivatives to be sold by ring-fenced retail banks. Stronger safeguards are needed than the Treasury have planned so far.”