By Daniel Hunter
The Federation of Small Businesses (FSB) has said that the banks need to take swift and decisive action to compensate the businesses caught up in the mis-selling scandal, after the Financial Services Authority (FSA) reports that 90 per cent of these complex products were mis-sold.
The FSB is pleased that the FSA has listened to its concerns and has broadened the sophistication criteria so that small firms will not be locked out of the redress scheme. However, it is concerned that all payments haven't been automatically suspended and that there is still not a clear route for a business to appeal a decision.
"The FSA's report into mis-selling highlights the seriousness of the situation finding that 90 per cent of loans were mis-sold," John Walker, National Chairman, Federation of Small Businesses, said.
"This is alarming, but will come as a relief to the thousands of small firms who have been anxiously waiting for an outcome on this very complex situation. We welcome the work that the FSA has done to date and that it has listened to our concerns around how it defines a sophisticated business.
"However with the pilot showing such a significant level of mis-selling we are concerned that the FSA has not mandated that all payments are suspended when a firm enters into the scheme — we would like the banks to do this for their customers. There is also a lack of clarity on what full redress looks like, with banks determining what constitutes consequential losses, and how an appeals process will work.
"What is clear is that firms will need expert support when they enter the scheme to ensure they receive the redress they deserve. Now the pressure is on the banks to contact its customers. They must do so quickly and decisively to draw a line under this matter and bring the situation to a close. This review only covers the first four banks, with the report into the remaining seven due in the coming weeks. The FSB will continue to fight for other firms caught up in this scandal."
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