Interest Rate Swap Derivatives

Kelvin Hopkins Excerpts

Thursday 24th October 2013 Commons Chamber

[Guto Bebb]

I am grateful for that intervention. I will come to hidden swaps later—“embedded swaps” is the technical term; “hidden swaps” is a fairer way of describing them—because they are a big issue and we need to address them.

The setting up of the redress scheme was the reason why we called this debate. It has taken months to reach an agreement to ensure consistency across the 11 banks involved. Originally we were told that Christmas was the deadline for completion. However, at this point in time there are 30,000 businesses in the cohort—I think that that figure is an underestimate, because of embedded swaps, for example, and the way the sophistication test works—so frankly the Christmas target will not be met.

[Kelvin Hopkins (Luton North) (Lab)]

rose—

[Guto Bebb]

Before I take any further interventions, it is worth making this point. I was recently involved in a mediation meeting with one of the banks and one customer, whom I cannot name, even with parliamentary privilege, apparently. The bank in question made it clear that it could not promise a date for paying redress before 2015. As such, although the intention of achieving consistency is correct, we have to put pressure on the FCA to ensure that we move at a faster pace.

One of the big frustrations felt by the businesses affected and the APPG is that since the pilot scheme was completed, the banks involved have spent upwards of £300 million on the administration of the scheme and recruited up to 3,000 people to deal with it, yet by the end of September only 32 businesses had been offered redress, to the total value of £2 million. I understand the complexity of getting this right, but it is simply not good enough for the banks to be spending that much money and for the businesses that need redress not to be getting it.

--- Later in debate ---

[Natascha Engel]

That is a very good point. We have had any number of cases where they have been passed from pillar to post. One of the terrible aspects of all this is that the individuals affected do not know where they can go to get justice, and they certainly do not have very much time to do that, because their businesses are going bust while they are waiting for justice.

[Kelvin Hopkins]

This very morning I have been speaking to a constituent who has been driven to the edge of bankruptcy by what the banks have done, and I have helped him to some extent. My hon. Friend is making a point about the lack of force behind the action that has been taken so far. Is there not a case for strong Government action now and, indeed, as the hon. Member for Bedford (Richard Fuller) mentioned, for criminal sanctions?

[Natascha Engel]

Indeed, and I am going to finish on both those points.

One way to make sure the banks cannot drag their feet in the way that they have is to impose a moratorium on the payments. That would really focus their minds. If the money is not coming in, I am sure they would try to settle this matter once and for all much more quickly. The number of suspensions of payments—and only in those cases where people are suffering significant hardship—is an absolute scandal. The fact that 30,000 businesses or individuals are waiting for some kind of redress and only 32 have had redress is also an absolute scandal. Something must be done.