700 SMEs crippled by bank mis-selling scandal now face long wait

A total of 720 small businesses in Greater Manchester still face long delays to get their own money back from their banks after being mis-sold interest rate swaps (IRSAs) according to campaign group Bully-Banks.

The sums – usually well over £100,000 and over £1 million in a number of cases - are being held back by banks who are accused of wilful delay, continuing to cause severe cash flow problems for small businesses and using the pressure created by the delay to negotiate down further compensation for consequential loss.

The problems follow the implementation of the Financial Conduct Authority’s (FCA) Review and Redress Scheme which is compelling the banks to review the sale of over 30,000 IRSAs to SMEs.

Under the review, if the case for mis-selling is proven, a small business is entitled to restitution - that is the return of the money paid out by the business under the IRSA plus interest - and is then entitled to compensation for any consequential losses caused by the mis-sale.

Despite over 90 per of the sales reviewed so far being assessed as non-compliant (i.e. they were mis-sold), the banks are delaying any refund of the agreed restitution until consequential losses are agreed, a process which could take many months or even years.

This, argues Bully-Banks, is grossly unfair and effectively depriving businesses of their own money.

Chairman of Bully-Banks Jeremy Roe said: “An IOU from a bank just isn’t good enough. SME mis-selling victims should get back the money they have paid under the mis-sold IRSA, with interest, as soon as possible to enable them to start to repair the damage done to their business by the IRSA. That prompt payment of the agreed damages would be the normal process in litigation.”

Bully-Banks is demanding that the FCA establishes the principle of instant repayment of restitution monies once it is determined that the IRSA has been mis-sold.

Mr Roe added: “SME’s need immediate restitution. Many of these businesses are experiencing real financial distress. We are demanding urgent action from the FCA. We are witnessing the continued delay of justice - and it’s hitting small businesses hard and damaging the wider economic recovery.”

Any small business which believes it has been mis-sold is advised to visit the Bully-Banks web site at www.bully-banks.co.uk for advice and guidance and learn from the experiences and lessons of other mis-selling victims.

Thanks to the efforts of Bully-Banks, the FCA has established a review for SMEs who were mis-sold IRSAs, but the campaign group is critical of both banks and regulators for the delays and slow progress made in securing justice for the small businesses affected.

Bully-Banks research found 85 per cent of IRSAs were sold to businesses in England, around seven per cent to Wales, seven per cent to Scotland and one per cent to Northern Ireland.