Finance law: Business secretary asked to change law on bank mis-selling

Finance law: Business secretary asked to change law on bank mis-selling

The Government is facing calls from opposition-party Labour to amend the law on mis-selling of financial products to help small businesses.

The calls come in the wake of stories that small businesses across the UK were mis-sold ‘interest rate hedging’ products which have since lost investors millions as rates have remained at all-time lows.

The Financial Services Authority, which regulates financial institutions at present, is now conducting a review of the claims made by small business. This could lead to an inquiry into how major lenders, including Barclays, Lloyds, HSBC and RBS all mis-sold these products to small businesses.

Toby Perkins is the shadow business minister under Labour.

“The Government’s response so far simply hasn’t been good enough. Small businesses are on the brink and they have done nothing,” he said.

The action being sought is an amendment to the law which would then allow groups of small businesses to bring class actions. Labour revealed at the weekend that they have written to Vince Cable, the business secretary, to ask him to change the law.

“Action must be taken to empower small businesses to bring collective proceedings to court in respect of financial services claims and to enable them to make complaints to the FSA or its replacement body, where financial services are damaging the interests of small businesses,” the Labour MPs wrote in this weekend’s Telegraph.

At Barclays’ annual meeting on Friday chief executive Bob Diamond was challenged by one small business owner to account for his bank’s actions. He admitted that the bank has made mistakes, but conceded that those mistakes were only in a small number of the total transactions.

“I can guarantee you in some cases we have made mistakes. It’s going to happen when we do thousands of transactions. When we make a mistake, we’re going to own up to it and we’re going to fix it,” he said.

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