By Claire West
The Federation of Small Businesses (FSB) welcomes the FSA's ruling that Interest Rate Swap Agreements (IRSAs) were mis-sold to small businesses. But in addition to the moratorium imposed on the sale of these swaps, the FSB also wants an immediate suspension of repayments on these products.
The FSA and the Financial Conduct Authority must also now carry out a thorough market review to establish how the market should operate - if at all - for small businesses. It must also review the level of protection small firms are afforded under regulation as well as investigate whether other banks, other than the big four, have been involved in mis-selling interest rate swaps.
John Walker, National Chairman, Federation of Small Businesses, said:
"Suspending repayments immediately would relieve and possibly rescue small firms that have been burdened with huge bills - in most cases for years - and who in some cases are close to bankruptcy.
"However, it will not resurrect the many small businesses that have already been destroyed by this appalling breach of trust: firms that turned to their banks for support and who were instead exploited.
"Britain's hope of escaping recession relies largely on the optimism and entrepreneurial spirit of its small firms, who collectively produce more than half the country's GDP. But that optimism is being shattered by the ever-lengthening series of scandals emerging from the banks they have been forced to deal with through lack of competition and regulation.
"At what point will big banks' chief executives take responsibility for the litany of scandals their employees have been found guilty of and which are causing untold damage to small businesses and Britain's economy?
"It is not enough that the guilty banks should simply be forced to repay the money they tricked out of their small business customers. The situation will not improve until and unless punitive measures are taken to stamp out these sharp practices and the fundamental attitude of the banks towards their small business customers changes. The top managers of these huge institutions must be held accountable.
"The scale of the mis-selling scandal is still not clear.. Too many affected firms have still not come forward and live in fear that if they speak out, their loans will be foreclosed and their banks will force them out of businesses. This ruling by the FSA should give them the confidence to step forward and they must now do so."