Responding to the development the Forum's Chief Executive Phil Orford said: "To see that 90% of the FSA's sample review of sales broke regulations is shocking, but unsurprising.
"Products forced on customers to ‘protect' them have in fact caused stress, debt and closure for many small businesses. It is bad enough that businesses with these products couldn't benefit from the historically low interest rate now in place because of the very large exit fees, but it is worse that many still remain tied into these contracts.
"It is fair to say that in the last few years banks have been no friend of small business, falling well short of the scale of lending needed to support SME growth. Yet these new findings show their role as a trusted adviser – let alone a lender – has never been in such a worse state. This is another epic fail by the banks, but one they must put right - and quickly too!
He added: "We respect the time needed for banks to conduct a thorough review but whilst these are carried out they must ensure businesses are not paying vast sums of money that threaten their very existence.
"If a business feels it is in financial distress due to one of these arrangements, it must request the suspension of the collection of swap payments pending the review. Ideally, banks will suspend all additional interest payments until completion of the review anyway.
"The ‘consequential loss' arising from these loans, that is the overdraft charges or additional borrowing costs, will be considered on a case by case basis. What this review cannot do is bring back some of the businesses that have failed as a result of the mis-selling.
"It is more important than ever that Government drives through change in our banks and sees them focus on customer support and lending, not aggressive sales machines."
|Share this press release|