Yesterday, I attended the latest meeting of the All Party Group on Interest Rate Swap Mis-selling, which affects a number of local businesses. Both the products and the process of clearing up after them are causing a great deal of distress and difficulty.
As well as giving direct support to constituents on this issue, I made an intervention in the recent debate called by the Group’s chairmen, my colleague Guto Bebb. You can read the full debate here. I said:
I would like to offer my hon. Friend an explanation of why banks are doing this kind of mis-selling. In my private Member’s Bill last year on the regulation of derivatives, I explained how mark-to-market rules allowed banks to up-front unrealised cash flows to declare profit immediately on moneys that they have not received. I wonder whether the Treasury Committee will investigate whether that is a key factor in encouraging this bad business.
There is also an organisation called Bully-Banks, a group of over three hundred owners of SMEs each of whom have been miss sold an IRSA. However it is estimated that more than 20,000 plus people are affected and the true number will only be known once this matter gains greater public awareness. You can read more about the pressure group here.
Interest rate swap mis-selling was last highlighted in the media in October of this year when a case was taken to the High Court for a pre-trial hearing. The Judge decided that the case must go to trial and said that Barclays objection of false mis-respresentation was ‘wholly without merit’. They go to full trial in late 2013. I predict there will be many more stories like this.
The meeting focussed on pressing the FSA to act promptly to protect businesses. As one of my colleagues put it, their rigour is in danger of causing rigor mortis. Whatever they are going to do, they need to get on with it.
I will continue to campaign for banking reform and honest money in Parliament and through the Cobden Centre. The APPG meeting was a further opportunity to push for justice in the banking system and to ensure individuals are appropriately protected. We need a return to decent banking standards, something my two Private Members’ Bills tried to achieve.