The compensation system for small firms that have been mis-sold complex financial products has serious failings, the Federation of Small Businesses (FSB) has told the Chancellor.
The FSB in Cornwall has written to all MP’s in the county to ask that they puts pressure on the Chancellor to put a redress system in place which better suits the needs of small firms.
Nationally, the FSB has written to the Chancellor, following a meeting with the Financial Services Authority (FSA) – the independent regulator that devised the system – and said the redress process “does not have the confidence of small firms, lacks transparency and will not help those firms affected as quickly as needed”.
The FSA’s pilot scheme, which started last Friday (September 21), involves 50 claimants from each of the banks. The FSB wants an urgent re-think and says it isn’t too late to implement a redress process, totally independent of the banks, which ensures consistency across all cases.
The FSB agreed with the findings of the FSA’s report of June 2012 that there was evidence of mis-selling. However, the organisation did not agree with its proposed method of redress, believing that an independent system, run separately from the banks that mis-sold the products, is the best course of action.
“This is not the first time we have raised our concerns with the FSA,” said the John Walker, national chairman of the FSB. “We’re deeply concerned that, as it stands, the (pilot) scheme provides no incentive for the banks to go and find the small firms that have been affected to compensate them.”