Labour MPs want investigation into alleged mis-selling to SMEs

Tim Wallace
Follow Tim
SMALL and medium-sized enterprises may have been ripped off by banks mis-selling financial products, and the government needs to offer more help, Labour shadow ministers argued yesterday.

Toby Perkins and Chris Leslie yesterday called on the government to push for a full investigation by the Financial Services Authority (FSA) into interest rate swap products that some small firms claim were mis-sold.

“A growing number of businesses are reporting that they did not realise the level of risk attached to these products which were sold as providing ‘cover’ to the customer; that they believe the products often had additional ‘bells and whistles’ that meant that the product was very complicated and the full implications of the products were not made clear; that the terms of the contracts enabled banks to pull out of the contracts on a fairly short term basis but tied the customer to the contract on a much longer term basis and that the termination penalties were so severe as to mean that the customer could not find any alternative bank to take them in the event that they wanted to move,” said the MPs’ letter to Vince Cable and Treasury minister Mark Hoban.

The FSA is looking into the claims, and is expected to decide at the end of next month whether or not to launch a full investigation.