PARLIAMENTARY DEBATES - United Kingdom Parliament

1585 Easter Adjournment
26 MARCH 2013 Easter Adjournment
1586
see more people from the Chamber today and from
outside the House travelling to my constituency to
enjoy a rich culture and beautiful scenery.
Mr Jeffrey M. Donaldson (Lagan Valley) (DUP): I
am enjoying my hon. Friend’s contribution, but on a
serious note, the 100th anniversary of the first world
war will soon be coming up. Will he acknowledge that,
during the great war, Ulster Scots played a role with
great heroism as part of the wider British Army? One
thinks particularly of the battle of the Somme.
Jim Shannon: I thank my right hon. Friend for that
intervention. Yes, our heritage is not just cultural but
historical. We fought alongside and within the British
Army at the battle of the Somme, and we commemorate
that contribution of our soldiers every 1 July. The
history stories that I was taught as a boy are so important
to me and to us as a nation because of our contribution
and our heroism and courage. Young boys of 16 and
17 told lies about their age to join the Army and
contribute at the battle of the Somme—I was going to
say the battle of the Boyne, but that would be going too
far back.
We Ulster Scots are very proud to have beautiful
scenery, a rich culture and the warmest of people, who
are anxious to welcome others to our heart and heritage.
I invite all Members to Strangford to discover our
Ulster Scots heritage, and I look forward to seeing
them.
BUSINESS OF THE HOUSE
Motion made, and Question put forthwith (Standing
Order No. 15),
That, at this day’s sitting, the matters to be raised before the
forthcoming adjournment may be proceeded with, though opposed,
until 8.00 pm.—(Mr Evennett.)
Question agreed to.
7pm
Mr Mark Williams (Ceredigion) (LD): I want to
address the issue of the mis-selling of interest rate
swaps by commercial banks and to ask in particular
why tailored business loans—or fixed-rate loans with
embedded or hidden swaps—are not included in the
Financial Services Authority’s review. This issue took
up a whole Back-Bench debate last June and I know
that we will return to it.
The pilots of the FSA’s review into interest rate swaps
revealed evidence that up to 90% of products had been
mis-sold by commercial banks, but the question is: why
is the review not looking at TBLs? Many businesses in
my constituency and, I would hazard a guess, across the
whole country are affected by them. We need a review
of those products if our constituents and business
people are to have any chance of redress.
TBLs are remarkably similar to other interest rate
swap products: they involve exorbitant exit fees for the
businesses concerned, profits are booked immediately
to the banks and there are huge incentives to sell them
to customers. When the all-party group on interest rate
swap mis-selling, ably chaired by the hon. Member for
Aberconwy (Guto Bebb), met last December, Clive
Adamson of the FSA told us:
“If there is no understanding of break costs given to the
customer and if there was a poor disclosure of exit cost, then it
was highly likely that there was a mis-sale”.
Yet on the grounds of a mere technicality, TBLs, which
are fixed-rate loans, will not be included in the FSA
review. That is unjust nonsense.
I can best illustrate that point by referring to two
businesses in Aberystwyth in my Ceredigion constituency.
First, Huw and Jackie Roberts of Minhafan Estates
Property Development took out a £750,000 quaintly
named vanilla swap over 10 years, which Barclays bank
referred to as a “simple swap”. The breakage clause to
get out of that agreement is £155,000 and their business
is included in the FSA review. Secondly, the Beechey
family who run the Black Lion pub in Aberystwyth
took out a £750,000 fixed-rate loan—a TBL with embedded
swap—over 15 years with Clydesdale and Yorkshire
bank. Their breakage fees are £200,000, but the business
is not included in the review. Both of those businesses
are in the same constituency and suffering severe financial
distress, yet one is in the review and the other is not.
Both were involved in a trade call with an FSA-regulated
derivatives expert when the hedging product was sold.
For 12 years the FSA has worked on the assumption
of a principle-based system of regulation. The results of
January’s pilots found that poor disclosure of break
costs was one of the most significant issues in assessing
compliance. However, banks such as Clydesdale and
Yorkshire are telling customers that they have no legal
or regulatory obligation to inform customers who have
been sold a fixed-rate and that they have no redress