The MP for the West Cornwall and Isles of Scilly constituency of St Ives, Andrew George, has pressed Government Ministers to do more to protect small and medium sized businesses from what he describes as the “sharp” practices of “parasitic” banks, in a debate in the House of Commons yesterday evening.
Mr George highlighted the cases of his constituents, and specifically named two which he had taken up on behalf of local businesses, that of Seasalt Ltd – the well known and successful clothing company which was established in Penzance in 1981 – and Coasters Tea Shop which, as Mr George described it, was “mis-sold” a business loan over five years ago by Clydesdale Bank.
Mr George said that many of the products which banks have been selling to businesses since 2001 are immune from any Government regulation and have resulted in a serious and potentially irrevocable break down in trust between banks and their business customers.
Mr George said: “Most businesses used to believe that they could trust the bank of which they had been a loyal customer and that banks would surely have a “shared interest” in their business succeeding. But banks have behaved like parasites engaging in sharp practice by mis-selling complex interest rate hedging products that they will have known were massively to the detriment of the small businesses that they flogged them to. Our businesses should be doing what they do well – growing the economy and creating jobs. But thousands of businesses have been held back and many others put out of business altogether.
“But being put out of business suits the banks. Because every company that they drive into administration has assets that they can sell and becomes a company that, conveniently, cannot seek redress from the bank.”
Mr George drew attention to the Financial Conduct Authority’s review of these mis-sold products which has to conclude by June and has called on Government Ministers to introduce stronger regulation and more effective redress for the businesses affected.