Oral Answers to Questions
Debate between Mark Menzies and Marcus Jones(9 years, 3 months ago)
Commons ChamberRead Full debate Read Hansard Text
Mark Menzies (Fylde) (Con)
6. What support his Department has provided to communities on neighbourhood planning and community rights since May 2010.
The Parliamentary Under-Secretary of State for Communities and Local Government (Mr Marcus Jones)
Up to March 2015, we provided nearly £50 million to help communities undertake neighbourhood planning and to access community rights and associated initiatives. We are going further and invested another £32 million in April to help even more communities take up their rights.
Mark Menzies
Fylde communities such as Warton and Wrea Green in my constituency have submitted comprehensive local plans to the council. Does the Minister agree that it is important that when the council is finalising the local plan, it takes into account the neighbourhood plans and the wishes of my constituents?
Mr Jones
I concur completely with my hon. Friend’s view. Our planning guidance is clear that local authorities should work in collaboration with neighbourhood planning groups when neighbourhood and local plans are being developed at the same time. Local plans are also subject to at least two opportunities for comment by any interested party.
Oral Answers to Questions
Debate between Mark Menzies and Marcus Jones
Mr Marcus Jones (Nuneaton) (Con)
7. What steps he is taking to meet future energy demand.
Interest Rate Swap Products
Debate between Mark Menzies and Marcus Jones(12 years, 6 months ago)
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Mr Marcus Jones (Nuneaton) (Con)
It is a pleasure to follow my hon. Friend the Member for Daventry (Chris Heaton-Harris), and I congratulate my hon. Friend the Member for Aberconwy (Guto Bebb) on securing what is, for many of our constituents, a vital debate.
In the short time available to me, I want to explore the methods used by one bank to sell an interest rate swap product to a business in my constituency, explain the disadvantage that that subsequently caused to the business, and discuss what more can be done to help businesses that feel that such products have been mis-sold to them. I have been asked by the business involved not to divulge either its name or that of the bank, because the business fears that that would prejudice its position in relation to the bank.
Anecdotal evidence seems to indicate that the business was persuaded and cajoled into taking an interest rate swap product by high-pressure sales tactics. There was what could almost be described as a pincer movement between the small businesses relationship manager and the capital arm of the bank, which clearly set out to persuade the business that converting a loan to an interest rate swap product was absolutely the right thing to do. The relationship manager told the business that it was the best option, because interest rates would go in only one direction: up.
Members have mentioned fixed rates. The business feels that the product was sold to it in a similar way to the way in which a capped-rate mortgage is sold. However, when my constituents asked what would happen if interest rates fell, the question was not answered with a proper explanation and a warning. The employees of the bank simply said that there was no prospect or possibility of a reduction in interest rates, given their historic low at that point.
The capital arm of the bank pitched the product in what I can only describe as a Del Boy-esque fashion—as if Del Boy was selling saucepans to a housewife at the market. The capital arm contacted the business and persuaded it that the product in question was fantastic and was usually available only to far larger businesses, but that as this business was such a good customer of the bank it could have the same deal. The capital arm then continually contacted the business—it did so almost daily—to explain that day’s special interest rate and to tell it the time was now or never to pick up that special deal. To compound the situation, while this was never discussed, the business was under a lot of added pressure and believed it needed to keep the bank sweet. It was the time of the onset of the credit crunch and the business feared the other accounts and facilities it had with the bank would not be serviced if it did not take the bank’s advice.
Mark Menzies (Fylde) (Con)
My hon. Friend eloquently describes the same situation as that suffered by hoteliers, shopkeepers and restaurateurs in Fylde and Lytham St Annes. These are not naïve people, but they believed what they were told by their bank relationship manager and they were misled. We must urgently address this issue.
Mr Jones
My hon. Friend is absolutely right. We are talking here about small businesses that do not have experience of these banking products, and they should never have been led down this route without very strong warnings explaining what they were taking on. The business in my constituency that I have mentioned feels precisely that way, and the consequence of all this is that it is now paying double what it would have paid if it had kept to the more traditional lending arrangements it initially had with the bank.
This business estimates that it has spent between £150,000 and £200,000 in extra fees and extra interest—on the friendly advice of its bank. As a direct result of the interest swap loan, it has struggled to repay its loan as interest rates have fallen. The bank said there was nothing it could do to help. Eventually, after being contacted on a number of occasions, the bank finally allowed the business to convert to interest-only payments, but that comes with its own consequence, because the capital is not repaid, leaving a legacy that eventually has to be dealt with.
It can be argued that these are commercial business-to-business relationships, and that any small business should have taken further advice, and that would be my usual view. However, often these businesses were put under great pressure by their bank, which was aggressively selling the product in question and advising its customer to take it, and there was usually a wider business relationship as well, involving other banking facilities. There appears to me to be a clear conflict of interest, therefore. There is also the question of how suitable these products are for small businesses.
What action can businesses that find themselves in this situation take? As with any dispute of this nature, they can go to law, but as has been pointed out by many colleagues, the chances are that a business in this situation will not have the money needed up front to be able to take up a case against a bank, which is likely to be a huge multinational organisation. Also, as my hon. Friend the Member for Camborne and Redruth (George Eustice) rightly pointed out, there might be another conflict of interests in that some of the lawyers who might take on such litigation cases will have professional relationships with the bigger banks. That is also unhelpful.
Oral Answers to Questions
Debate between Mark Menzies and Marcus Jones(12 years, 9 months ago)
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Mr Marcus Jones (Nuneaton) (Con)
4. What effect he expects the Government’s youth contract to have on the number of unemployed young people.
Mark Menzies (Fylde) (Con)
16. What effect he expects the Government’s youth contract to have on the number of unemployed young people.