Interest rate protection policy mis-selling has hit "garden centres and other horticultural businesses", says a UK firm handling claims.
A year on from concerns being raised about the way banks sold interest rate protection policies Seneca Banking Consultants has written to the Financial Conduct Authority to highlight bank delaying tactics.
Seneca would not name businesses hit, saying: "Due to the sensitive nature of the scandal, it is very hard to get business owners to speak publicly about their experiences. Businesses, especially small companies, are often unwilling to admit to being in dispute with their banks for fear of sending ripples through their supply chain."
The company is managing claims against £1 billion of debt, says banks are dragging their feet to exploit the fact that breaches of contract are only actionable within a six-year time frame.
Seneca's Daniel Fallows said: "Every day businesses are losing the right to take legal action because of the six-year rule. The banks have been delaying, denying and stonewalling to run down the clock. We would ask the FCA to publicise how many settlements have been agreed by the banks and paid within the past 12 months. We believe the figure is derisory."
The open letter to FCA chief executive Martin Wheatley criticises the process of obtaining justice as slow, formulaic and lacking in transparency. It also points out that many victims have been left with little scope to obtain redress.
The time the whole process takes means the opportunity to resort to suing for breach of contract evaporates each day.
"In addition those banks that sold these complex products in an even less transparent manner by embedding them within a term loan agreement continue to successfully convince the FCA that they should be excluded from the redress scheme. In our view this is another clear example of the scheme being weighted in the banks favour to the detriment of those businesses that have been mis-sold these products."
Seneca Banking Consultants is advising 170 businesses in the North West, Yorkshire and Midlands, operating across sectors that include farming, property, construction, retail, hotel and leisure, and care homes.
The bulk of claims for mis-selling of interest rate protection policies, known as swaps, collars and caps, relate to loans taken out between 2005 and 2008. Marketed as a simple way of protecting against rises in the cost of borrowing, and often made conditional as part of a loan agreement, these products were in fact highly complex financial derivatives, with significant downsides. As interest rates fell they became financially disastrous, and have been blamed for a number of company failures.
The UK regulator announced on June 28 last year that it had ‘serious concerns’ about the way these products were sold to business. Early estimates suggested at least 40,000 SME’s were affected by bank mis-selling. A subsequent pilot scheme revealed that in over 90 per cent of the 173 cases the regulator examined, mis-selling and breaches of acceptable practice had taken place. The FSA had looked at a sample of cases from Barclays, HSBC, Lloyds and Royal Bank of Scotland.