Banks should be held accountable and deliver quick redress for the damage their strategies have been found to be doing to small and medium-sized businesses, according to Fraser Whitehead, Head of Group Litigation & Commercial Services at Slater and Gordon Lawyers in London.
Fraser's comments follow research by a leading government advisor, Lawrence Tomlinson, which contains allegations of misconduct towards businesses by the Government-backed banks. Bank behaviour included cases in which businesses were deterred from accessing finance before even being given the chance to apply. It also detailed cases in which businesses were charged such astronomical fees while in “business support” that their business was put into financial distress.
A Slater and Gordon client recently secured the highest known payment so far for a victim of the mis-selling of Interest rate swaps when Barclays Bank agreed to compensate Landish Consultants Ltd with £1.5m. Fraser Whitehead said, “The Tomlinson dossier shows it is often the banks’ own strategies that are plunging SMEs into financial difficulties.
“Our work on interest rate swaps has shown us that banks extract enormous fees from businesses they redefine as being in trouble even when it’s often the banks’ subjective approach and the charges imposed for bank products that are putting the businesses into financial hardship in the first place.
“Banks then use surveyors on property revaluations and accountants on business re-evaluations at significant cost, much of which ends up as extra cost dumped on the business at just the time it needs less liability not more.
“The apparent mutuality of interest between the banks and those intervening on the banks behalf in downgrading the perceived business performance of certain SMEs is a further cause for concern. The final blow is when the bank appoints a receiver to protect its interest. Banks should be held accountable for this seemingly unfair double standard that goes against the Government’s own growth agenda.”
Fraser Whitehead is Head of the Group Litigation & Commercial Services department at Slater and Gordon Lawyers in London.
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