more than 100 firms have now joined the action group on 'embedded swap' loans widely sold by Clydesdale Bank, as MPs step up their lobbying for the loans to be regulated.
The NAB Customer Support Group will hold its second annual meeting in Aberdeen on Thursday as the Treasury Committee prepares to summon NAB and other banks to its short inquiry on SME finance.
The meeting is due to be addressed by Iain Mitchell QC of QA Legal, Cambridge academic Richard Dempster, and MP John Thurso, the treasury committee member whose early day motion on the issue so far has the support of 77 MPs.
Banks have already paid out £300 million, and made ever-rising provisions for the mis-selling of loans linked to standalone derivatives or swaps which protected against rising interest rates but triggered hidden and prohibitive 'break fees' when SMEs needed to exit their loans.
Embedded swaps, however, which were built into NAB's most widely-sold loans and sold by banks UK-wide to an estimated 60,000 businesses compared with 40,000 who were sold standalone swaps, are excluded from the review by the Financial Conduct Authority (FCA).
Although the FCA says they have similar characteristics to regulated loans, they are classed as commercial loans outside FCA regulation.
Mr Thurso, the MP for Caithness, Sutherland and Easter Ross, has said MPs " want to make sure that going forward unscrupulous banks do not embed everything in order to escape regulation, which is a clear danger".
At last week's treasury committee Mr Thurso criticised business groups the CBI and FSB for being "unaware" of both the scale of the problem and the lack of regulation, adding that NAB's withdrawal from commercial property lending was compounding the problem by triggering break fees. The MP said: "I am being told by all the FSB people I know in Scotland this is quite a serious problem."
NAB has said it is "committed to maintaining constructive dialogue with customers" on property loans, and that break fees were always fully explained. The FSB told MPs it had only become aware of the embedded swaps issue last December.
Yesterday St Andrews hotelier Jim McGrory, a member of the action group, said: "I got in touch with the FSB 18 months ago with a four-page document on what happened to me."
Mr McGrory received a provisional adjudication from the Financial Ombudsman Service last September that Clydesdale Bank mis-sold his £562,000 embedded swap loan in 2007 and should restore all his losses.
In December Mr McGrory rejected the bank's offer to cancel his £90,000 break penalties, with no other redress, in exchange for dropping his complaint. The same month another Scottish hotelier Alf Berry won a mis-selling verdict against the Clydesdale from the FOS, and there are more cases in the pipeline. Mr McGrory's final ruling is imminent, and the Clydesdale has now signalled readiness to negotiate on both primary and consequential losses.
The CBI's representative Matthew Fell told MPs last week that "if there is mis-selling, surely it is a conduct issue", while Mr Thurso said: "Hopefully we will be able to ask the relevant minister that question when they come before us."
John Glare, secretary of NAB Customer Support Group, said it now had 102 members and any SME with a fixed-rate loan was welcome at the meeting. The group estimated last year that mis-sold loans had cost each member on average seven lost jobs.
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