Long road back to restoring business confidence in banks
Commenting on the announcement by the Financial Services Authority that it has found ‘serious failings’ in the sale of financial products to SMEs, John Longworth, Director General at the British Chambers of Commerce (BCC), said.
“The ‘serious failings’ found by the FSA in the sale of interest rate swap products will only damage business’ perception of banks further. Those that feel they are victims of mis-selling must have access to an independent assessment as soon as possible, as business survival may depend on it. Clear guidance and transparent timetables on reaching a judgment should be the bare minimum of any system of redress.
“Many businesses look at practices undertaken by some in the financial services industry in disbelief and horror. Relationships between institutions that provide finance and those that receive it must be based on trust. Unfortunately, the revelations of the last week will only erode confidence in the banking system, and it will be a long road back to restore it.
“Lenders will need to do everything possible to rebuild their connections with the business community, so the economy can function in an orderly way again. But trust is hard to earn and easily lost, and a fundamental change in how banks and their business customers interact will not happen overnight. For this reason, the government must do two things to get the economy moving. The first is to breed confidence that wrong-doers will be held to proper account. The second is to create a state-backed business bank that will serve as a trusted source of finance provision. Only then will we see a stable base from which businesses can drive a sustained economic recovery in the UK.”