BUSINESSES are being forced to sell assets so they can afford to continue paying for interest rate hedging products that were mis-sold by banks as they await compensation from the Financial Conduct Authority’s redress scheme, according to a campaigning Yorkshire lawyer.
Johanne Spittle, director at Lupton Fawcett Denison Till, said that several Yorkshire farms have had to sell land which has been in their family for generations to continue payments for mis-sold hedging products, such as swaps or collars, while they wait for the banks to assess their redress claims.
Other businesses, including many SMEs in Yorkshire and the North East, have had to take out further borrowing to continue payments, according to Ms Spittle.
Earlier this month, it was reported that Britain’s banks had so far paid out less than 10 per cent of the £3.75bn they have set aside to compensate small firms mis-sold interest rate hedging products.
The FCA said that £306m had been paid out by Britain’s biggest four banks by the end of January.
At the time the FCA said that redress was “rapidly flowing to small businesses”.
But Jeremy Roe, chairman of Bully Banks, the pressure group representing small businesses who were mis-sold complex products by the major banks, said the redress process was taking “an extraordinarily long time”.
The redress scheme was announced in June 2012 and the FCA said it ordered banks to begin paying compensation last May. This month it said that all four banks were on track to complete the compensation process within a year of the scheme starting. An FCA spokesman said: “Any business that is in financial difficulty, should contact its bank. Banks are continuing to prioritise customers in financial distress. What’s more, the vast majority of those who make the request have had their payments suspended pending the outcomes of their reviews.
“Until the final redress payment has been determined, the banks will not foreclose on or adversely vary any lending facility, without giving prior notice to the customer and obtaining their consent, except in exceptional circumstances.”