Chuka Umunna, Labour's Shadow Business Secretary, responding to this morning's FSA findings on rate swaps, said:
“Labour and leading business figures have been calling for more a responsible capitalism and change and reform in the financial services sector, whilst the Prime Minister and the Chancellor earlier this year inferred that this demonstrated ‘anti-business’ sentiment. But today the FSA has confirmed, yet again, that the banking sector has not been acting in the best interests of their business customers with the mis-selling of interest rate swap products to them.
“As with the attempted manipulation of LIBOR, these banks need to explain who knew about this mis-selling and when, who was responsible and why their senior management teams failed to put in place appropriate systems to stop this wrong doing.
“With the catalogue of wrongdoing in the British banking sector growing, the sector urgently needs to act to rebuild trust, demonstrate it understands the huge damage to its reputation and show that where there has been wrongdoing, it will ensure people are held to account.”
Chris Leslie MP, Labour's Shadow Financial Secretary to the Treasury, said:
“Hundreds of small businesses across the UK have suffered because the banks took advantage and mis-sold these interest rate swaps unfairly and today's FSA findings are cold comfort for firms who have gone bust or for employees who lost their jobs as a result.
“While the news of FSA action is welcome, we will study this deal with the banks carefully to ensure that the distinction between simple and complex interest rate swaps does not restrict compensation if it is due.
“Labour has consistently called for the banks to offer a moratorium on foreclosing for customers at risk of going under while their complaints are being investigated. There is still an urgency to ensure firms can continue in business while waiting for the banks to reconsider each case.
“With these FSA findings it is astonishing that the Chancellor should want to continue allowing some of these interest rate swap products to be sold to business customers in his forthcoming Banking Reform Bill. He is wrong to ignore the clear recommendation of the Independent Banking Commission which suggested ending the inappropriate sale of derivative products by retail banks. The Chancellor should rethink, do another U-turn and change his mind on this.”