It's payback time as banks told to refund millions to local firms
EAST Riding businesses have been promised a multi-million-pound boost by a ruling on a banks mis-selling scandal.
Firms borrowing money before the recession were sold complex fixed-rate loan agreements they did not need.
They resulted in crippling repayments.
Now, the Financial Services Authority (FSA) has ruled – in most cases – the banks were mis-selling and must return the money.
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Property developer Jon Los, owner of Keygrowing in Woodmansey, is expecting to get back the £900,000 he has paid to service an Interest Rate Swap Agreement (IRSA) over the past five years.
His bank, HSBC, had already put the repayments on hold, pending the outcome of the FSA's investigation.
Following the FSA announcement, Mr Los said: "It's a good, landmark decision. A lot of these deals were done on a banker's handshake."
Mr Los, whose business involves borrowing money to start businesses and then selling them on as going concerns, has been able to withstand the repayments and is confident of getting his money back.
But many others have been plunged into bankruptcy. And the precise details of the FSA's ruling have been criticised by some of those involved.
More than 100 firms in the East Riding have joined the Bully Banks campaign group, fighting for justice.
Between them, the companies in the group have paid out an estimated £50m. They have been unable to expand or employ more people because of crippling repayments. They are keen for more details on the redress they can expect.
Jeremy Roe, chairman of Bully Banks, said: "This is a Polo settlement – it has a fundamental hole in the middle, with no definition of what is 'fair and reasonable', what actual redress businesses will receive, nor any deadline for resolution.
"However, we are delighted to be vindicated that mis-selling has taken place on an extensive scale and we give a guarded welcome to a number of positive moves made by the FSA.
"But until the FSA and the banks complete the process by addressing the hole, we will not be satisfied."
As well as making sure businesses are properly compensated, Mr Los says it is vital the trust is rebuilt between banks and businesses.
He said: "We need to start rebuilding our relationship with the banks.
"It has been proved that a lot of wrong has been done and we want to be put back into the situation we were in before we were sold these agreements.
"People borrow money to go forward in business."
The campaign has been supported by Beverley and Holderness MP Graham Stuart, who joined the all-party parliamentary group looking into swap mis-selling and criticised banks' "cavalier, self-interested behaviour".