in-cumbria

Stop repayments on mis-sold loans, says Cumbria federation

By John Connell

Last updated at 14:41, Friday, 06 July 2012

The Federation of Small Businesses in Cumbria and Lancashire has called for the immediate end to interest rate swap repayments.

Gary Lovatt

The move follows the Financial Services Authority’s (FSA) ruling that Interest Rate Swap Agreements (IRSAs) were mis-sold to small businesses.

In addition to the moratorium imposed on the sale of these swaps, the FSB wants an immediate suspension of repayments on these products. Gary Lovatt, regional chairman for Cumbria at the Federation, said: “We are pleased that the FSA has classified this as an issue of mis-selling.

“A number of our members have been affected by this and we expect many more small businesses will come forward now that the issue is out in the open.

“There is nothing to fear now that the FSA has ruled and we urge the FSA to be diligent to ensure that small businesses who have been mis-sold this product are indeed compensated by their bank.”

The complex Interest Rate Swap deals were offered by banks to act as an insurance policy against rising interest rates.

However, many small businesses were unaware that their repayments would rocket should interest rates fall or that the penalties involved to get out of these plans were enormous.

Mr Lovatt said: “The banks involved in this need to be held to account for their conduct. These products were complex in nature and should not have been sold wholesale and without in-depth advice.

“This issue provides further evidence of the conduct of some banks which helped to get us into recession in the first place.

“Small businesses have been paying back substantial amounts of interest because of the agreements they were mis-sold, which has hampered business confidence and stopped small businesses growing and supplying the jobs which we need across Cumbria.”

The FSB is the UK’s leading business organisation with more than 200,000 members.

It exists to protect and promote the interests of the self-employed, and all those who run their own business.

First published at 14:07, Friday, 06 July 2012
Published by http://www.cumberlandnews.co.uk