Small victories are still sweet

david goliath

I’ve been doing a lot of whining and complaining in recent posts. It’s even annoying me. Here’s some good news for a change.

A number of small businesses have been damaged or destroyed by their bank’s criminal behaviour. Last week a group representing them saw Parliament discussing their case for four hours. Many MPs agreed with the businesses and condemned the banks.

This followed an earlier campaign to persuade the Financial Conduct Authority to look into this scam. It was such blatant fraud that the FCA was forced to acknowledge it, and order the banks to pay compensation. There’s little hope of that being done speedily, but we have to move one step at a time.

It’s time to explain this money-making scheme. A few years ago, mainly between 2005 and 2008, businesses applying for loans were advised by their banks to purchase Interest Rate Swap Agreements as well. The reason given for this was that interest rates would rise, and these agreements would protect the borrower from the effects of that. It was rarely, if ever, explained to the customer what would happen if interest rates fell.

As we all know, rates did fall. These businesses did not derive any benefit, because the interest rates on their loans rose considerably. Many businesses were forced to cease trading.

The complaint that these businesses make is that they were wrongly advised when this product was being sold to them. It was clearly not suited to their needs. Many of them were not merely advised to buy this inappropriate product. Their bank insisted on it.

The customers were not given enough information to allow them to make an informed choice. The sales persons did not trouble about this. Their job was to coerce the customer to buy. Their bonuses depended on it.

Banks have attempted to wriggle out of responsibility by claiming that, when they advised their customers, they were not acting as advisers. It really is Looking Glass World.

There we have it. The banks told untruths and half-truths to enable them to extract money from their customers. Fraud.

Surprisingly, there are still plenty of people who believe that a bank’s only responsibility is to make profits for the benefit of its shareholders. It doesn’t matter who gets steam-rollered in the process. You’re as likely to read that in the Guardian as in the Telegraph. I don’t share that view. Why can’t you make money, and still act with decency?

So, I applaud these small businesses. They have started out on a long road. Hopefully, it will lead to their receiving redress from the robber-barons of the financial world.


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