27 March 2015 | Online since 2003



18 January 2013|Finance,News

Agriculture sector waits on bank mis-selling relief


Banks are being put under pressure to speed up compensating the scores of farmers thought to be struggling as a result of mis-sold interest rate protection products.

The scandal emerged last summer when the Financial Services Authority (FSA) revealed "serious failings" in the way these complex hedging products had been marketed to thousands of small and medium-sized companies, including many in the agriculture sector.

Eleven high street banks, including Barclays, Lloyds Banking Group, HSBC, the Royal Bank of Scotland, the Co-Operative Bank, Santander UK, and the Yorkshire and Clydesdale banks have agreed to compensate firms which were the victims of such mis-selling.

Several other smaller lenders have joined the FSA compensation scheme, but there is widespread concern that the process is taking too long.

Guto Bebb, the Conservative MP leading the all-party Parliamentary campaign to get redress for business, has warned that some lenders are dragging their feet, delaying the ability of other banks to launch the pilot scheme.

He has also written to the FSA to point out that, "We should not allow a position to develop where the banks can only move forward at a pace dictated by the most intransigent institutions."

Daniel Fallows, a director at Haydock-based Seneca Banking Consultants, which is handling a number of claims for farmers, said: "Action needs to be taken as an absolute priority. Thousands of SMEs have been sold products by banks they thought they could trust which in fact have damaged their business. The owners have been left straddled with ruinously high interest rates for loans and a great deal of personal anxiety and stress."

"The businesses taking out these products included the owners of farms, pubs, restaurants, hotels, and businesses as small as single outlet cafes and fish and chip shops."

"The products were often presented to them as a simple insurance against rising interest rates, when in fact these hedging products are highly complex financial derivatives."

"Many victims were not made aware of the nature of what the bank had involved them in - or the very significant costs attached to exiting the product. In some cases, this has caused businesses to fail."

"One of the complications for any business owner wanting to go public with just how damaging these schemes have proved is that if their dispute with their bank becomes public knowledge it can damage their business," said Fallows.

"Directors can also be reluctant to talk about it because they feel they have been duped by the bank into accepting what was in reality an inappropriate product sold by a highly incentivised individual."

The FSA estimates that over 40,000 small and medium businesses may have been mis-sold interest protection products which involve mechanisms known as swaps, collars or caps.

"But it’s important to check your finances and take specialist advice if you think you were sold one of these interest-protection products" said Daniel of Seneca Banking Consultants.

Some borrowers have already filed complaints with the Financial Ombudsman Service.

In findings published in October, two unnamed banks were ordered to pay hundreds of thousands of pounds in compensation to two customers who were mis-sold hedging products.

Identified only as 'Bank E’ and 'Bank S’, the lenders were accused of putting their own profits ahead of the customers’ interests in selling them the hedging products that ended up crippling the businesses due to the high interest payments.

One judgement involved an unnamed farmer identified as 'Family W’. Tony Boorman of the Financial Ombudsman Service said 'Bank E’ had sold the hedges "primarily for the bank’s commercial convenience and with little or no attention to the needs of its clients."

Boorman's findings in both cases overturned original verdicts in the banks' favour and raise the prospect of a flood of new cases from scores of farmers sold interest rate hedging products.

In the case of 'Family W' against 'Bank E', the new FOS verdict recommended the lender pays compensation to the farmer that could exceed £500,000.

Estimates of the eventual cost of hedge mis-selling vary greatly, however some experts believe the scandal could end up costing the banking industry more than £10bn, potentially making it more costly than payment protection insurance mis-selling.

Download



Comments


21-01-2013 07:59 AM | Posted by: Jeremy Roe
If you are a farmer who has been mis-sold a SWAP go to the Bully-Banks' website and join over 2000 small business men and women who are seeking justice for the mis-sale of these products.

To post comment without approval login or register

Display name

Please enter your name

Email (optional)
Comment

Please enter your comment

Post Comment

Your comment submitted successfully.Please wait for admin approval.

Some error on your process.Please try one more time.



Jobs


18 March 2015
Electrical Maintenance Engineer
Food, FMCG, Meat, Dairy, Fish, Seafood, Engineering, Maintenance, PPM, Electrical, Mechanical, Engineer,. Our client, a food ...

9 March 2015
Study Support Tutor (part time), Ayr
Our ambitious and exciting vision is to work at local, national and international levels, leading innovation and sustainable ...

19 March 2015
Weekend Poultry workers Staunton on Wye
This position is at our Staunton on Wye farm education :. KEY RESPONSIBILITIES > Working in Poultry houses i.e walking the...

25 March 2015
Electrician
ELECTRICIAN, 16TH, 17TH, INDUSTRIAL, CONTAINMENT, CONDUIT, FOOD, DAIRY. 4 x Electricians required for the Hereford area, exce...

9 March 2015
Multi Skilled Engineer - FMCG
Food, FMCG, Dairy, Bakery, Fresh Produce, Seafood, Fish, Meat, Beef, Pork, Lamb, Manufacturing. Our client, a well known FMCG...




Top stories you may have missed
23 March 2015 | Cattle

UK butchers face difficulties to recruit...

Butchers in the UK are losing a generation through lack of training opportu...


20 March 2015 | Arable

Dust - the secret fertiliser?

NASA research has revealed how dust blown from the Sahara desert helps supp...


19 March 2015 | Arable

The Budget 2015: A Farmer's Budget?

“In the run up to the Budget 2015 most commentators were predicting that th...


17 March 2015 | News

UK's first floating solar power system l...

The UK’s first fully operational floating solar panel system has been unvei...


13 March 2015 | Animal Health

Labour and Conservatives clash over badg...

Axing the badger cull in England and Wales will save more than £120 million...


12 March 2015 | News

Solar could be cheapest energy source by...

By 2025, solar power could become one of the cheapest forms of energy in ma...


11 March 2015 | Finance

English buyers turn their attention to S...

Demand for Scottish farm land remains strong and continues to be better val...


9 March 2015 | Cattle

2020 vision for the Welsh red meat indus...

The Welsh red meat industry should aim to increase sales by at least 34 per...


6 March 2015 | News

MP raises egg industry concerns on trans...

Fears about the impact that a proposed transatlantic trade agreement could ...


Stay safe and legal when flying drones

The use of Unmanned Aerial Vehicles and Unmanned Aircraft Systems - or dron...