Financial Services Bill

Stewart Hosie Excerpts

Tuesday 22nd May 2012 Commons Chamber

SMEs are consumers, just as individuals are; and just as individuals can be victims of mis-selling, so can small businesses. There will from time to time be vexatious or malicious complaints about particular products, but they can be dismissed by the regulator. The Minister has helpfully tabled an amendment to clarify that a small firm—it might be an independent financial adviser or an approved person—should not be deemed as a consumer when making a super-complaint. That is a perfectly good amendment, but we need to recognise that there is a gap in the legislation when it comes to small firms wanting to make complaints in their role as consumers of financial products.

[Stewart Hosie (Dundee East) (SNP)]

Is the hon. Gentleman concerned that, if the amendment is passed, financial institutions might stop providing the hedge products against interest rate changes or forex changes that SMEs might need and from which they might benefit? Is there not a slight risk of those products no longer being available, adding to the risk for SMEs over a period of time during which interest rates and foreign exchange rates might change?

[Chris Leslie]

I am grateful to the hon. Gentleman, but no, I do not think that is a risk. Amendment 73 does not propose to outlaw interest rate swap products; indeed, it is not specifically related to those particular products. It is really about the powers of small firms to complain and to take proceedings if they feel that they have been mis-sold a particular product.

On the particular issue in the news about interest-rate swap products, there are some serious questions that the Financial Services Authority and the Minister need to answer. Were those interest-rate hedge products a requirement of loan agreements, or were they optional? Were the minimum and maximum parameters fair and balanced, or was the downside risk always likely to hit the consumer more than the banks? How frequently was there a mismatch between the term of the loan agreement and the term of the hedge product obligation? Sometimes the term of the hedge product obligation continued even though the loan term had concluded. Were there asymmetrical rights to cancel? In other words, could the banks cancel the arrangement for a particular product, with which the consumer or small firm had to continue? Those are some of the key questions.