I spoke in the House of Commons debate today on the RBS Global Restructuring Group and SMEs which focussed on what can be done to address the injustice suffered by small businesses wrongly persuaded to take out complex bank loans.
The debate was very well-attended and each MP gave examples of small businesses in their constituencies which have been victims of this injustice. In a nutshell, these businesses have been persuaded to take out complex loans only to find that the repayment costs rise dramatically as interest rates fall. What’s worse, is that there is no effective means of redress - not only are the banks too big to fail but they are also too wealthy to sue.
Having spent 25 years of my life starting and building businesses, I know that small businesses are the backbone of our economy and access to finance is vital. It is, therefore, worrying that there is now a crisis of confidence between our businesses and our banks as detailed by every MP who took part in this debate.
This has affected tens of thousands of businesses, people’s life’s work, across the UK including many in my own constituency. Jon and Kerry Welsby, for example, ran a property business in Filey. Their monthly payments on their Lloyds Bank loan rose from £6,974 to £17,555, leading to their business failure in 2011. The bank would only compensate the Welsbys for the mis-sold product - not for the loss of the whole business.
We need a Financial Services Tribunal which can tackle complex cases. The banks would fund it so it would be much cheaper for the claimant to bring an action and they would not have to pay the banks’ legal costs if they lost. As a result, lending would increase as confidence between banks and business returns.
Notably, during the debate, each MP set out their case for a tribunal. Similarly, the All Party Parliamentary Group (APPG) on Fair Business Banking and Finance, of which I am Vice Chair, is considering the idea of a tribunal as we need to ensure that justice is done.
The APPG is prepared to conduct proper research and we have support from participants in the financial services industry. We now need time for the Treasury to work with us to ensure that we deliver the right solutions for small businesses and in the interests of the whole UK economy.
READ the debate in full via Hansard here
WATCH my contribution here