Panorama: Business Owners Need to Get Out of Banking

Anyone who saw last night’s Panorama (8.30pm, BBC1) would have felt incredibly sorry for the featured business owners whose lives have been ruined by the banks which sold them interest rate swaps alongside business loans.

Business owners are many things, but they are certainly not all financial masterminds and the interest rate swap (there was even a £4.5m swap arranged over the phone while an owner was driving his car) is not a straightforward product. One owner of a children’s playschool in Wales admitted being very risk averse and would not have bought a product that exposed the business to the tune of £100,000.

That’s what he got though. Several years later and having suffered medical problems because of it, the business is just about scraping by and talks are ongoing about redress.

Banks may tell you they have changed, but it would be naive to assume all those who pushed these sales to secure bonuses for themselves and their bosses have left the profession and the culture has been totally transformed. The stack of 30,000 cases and the fact that in 9 out of 10 cases the banks were found to have mis-sold this product is proof this was widespread and people did very well out of it.

RBS’s Global Restructuring Group was featured as part of the programme, where one business owner from Norfolk described how the group assumed control of his business, eventually running it into the ground after ensuring all RBS debts were paid – ahead of those of HMRC, despite the bank being state-owned at the time. He maintained he could have turned it around without their help and met all his liabilities.

The real question for business owners is whether they can trust the banks again to look after their best interests. You could ask yourself, why take the chance?

There is a real risk that as the economy continues to recover, banks will call in loans from successful companies, putting pressure on everyone. How long could you stay in business if your overdraft or loan was called in?

The answer is to refinance with With competitive rates from individuals, not institutions, your loan can’t be called in and there are no early repayment charges.

De-risk your business by applying for a loan now

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