Interest Rate Swap Products

Paul Uppal Excerpts

Thursday 21st June 2012 Commons Chamber

[Guto Bebb]

There have been examples of such scenarios, which have come across my desk as a result of what has now become a campaign. One of the reasons for holding the debate is to ensure that more cases come forward, because the more information we have, the easier it will be for the FSA, for example, to bring the issue to a resolution and for the banks to acknowledge that there is a problem. The hon. Lady makes an important intervention.

[Paul Uppal (Wolverhampton South West) (Con)]

I have a slight confession to make. I spent a great deal of my 20 years in business dealing with swaps, collars, caps and all sorts of financial instruments. The case highlighted by my hon. Friend of its being a fixed rate product in a sense misses the point. In general, such products were hedges—they were there to mitigate risk. A lot of customers went awry because the bank would often present the products as a loan but would gear up much more if the risk could be mitigated. Such financial products were often sold on that basis.

[Guto Bebb]

That is an important point. My comments will state clearly that those products are not necessarily wrong. The question at stake is whether the products were sold appropriately, and whether there was a degree of mis-selling. Sophisticated investors, understanding what they are doing, should have the right to enter into such agreements. My question is whether the banks should be going after businesses with turnovers of less than £200,000 a year.