East Anglia: Small firms to have their say at FSB banking forum
THE first in a new monthly updates from the Federation of Small Businesses sets the scene for the second FSB East Anglia Banking Forum event which takes place on Friday this week at Lynford Hall, near Thetford.
COLIN Aldous and Karl Rout have something in common – they both run successful businesses in Suffolk, providing an excellent service to the public every day.
Mr Aldous runs the Ufford Park golf hotel, and Mr Rout the Orwell Crossing Lorry Park.
The two have something else in common, an issue that is common across a worrying number of businesses.
In 2007 both were sold – and, in their view, mis-sold – Interest Rate Swap agreements. At the time, Mr Aldous’s business profits came in under a banking covenant, and he feels the bank took advantage of this period of low profitability by insisting he buy an interest rate swap. Mr Rout made �40,000 profit in 2007, leading him to question why the bank felt the need to sell him the swap.
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Mr Rout’s swap agreement was due to end in 2010, at the same time as his loan. However, he paid his swap for an additional three months, overpaying �150,000 in total.
Mr Aldous and his wife at have both forgone salaries since their swap, and have had to lay off some of the 200 staff at their business. To break this swap would cost them �450,000, an issue they have attempted to raise with their bank through its complaints procedure, to no avail.
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It isn’t all doom and gloom however, as Mr Rout has found ways to manage his borrowing, using land he has around his business. He expects that by next year he will no longer have any bank borrowing outstanding. For Mr Aldous and his wife, although they have not taken a salary, they believe the worst is now behind them, and overall have a positive day to day relationship with their bank.
For many businesses, however, swaps are still causing them huge problems, with some going under due to the pressure.
The FSB in East Anglia held a banking forum last year, where MPs and banks pledged to do more to help small firms, many of whom are ready to grow. For Mr Rout, it was this forum which alerted him to the fact he had been sold a swap agreement by his bank, and caused him to attempt to seek redress.
The FSB is monitoring closely the FSA’s proposed redress scheme, with the results of the pilot scheme due at the end of this month.
The Chancellors Autumn Statement at the end of the last yea, appears to have demonstrated governments’ appetite for reform in the banking sector, and the FSB welcomed the first Parliamentary Commission on Banking Standards’ report in December, recommending a ring-fence between the retail and investment arms of the banking sector, which will mean a safer and more secure sector.
On Friday, January 11, a number of Suffolk and Norfolk MP’s including ministers, alongside banking representatives will meet once more at a second banking forum, to see what progress has been made since last year, answering questions from the business community on the perceived lack of available finance, and solutions to the still ongoing mis-selling issue.
Networking and discussion of alternative finance provision will be part of the forum, to provide small firms with an opportunity to see how they could grow in 2013.
To attend the forum, which is being held at Lynford Hall, near Thetford, please visit: www.bankingforum110113.eventbrite.com/# or call Jeanette Thurtle on 01953 498915.
Elizabeth Truss, MP for South West Norfolk, who is due to co-chair the event: said: “I am delighted to support the FSB in hosting the Banking Forum. Businesses need to know the lending streams available to them, not only from the leading banks but also business angels and the Enterprise Investment Scheme as well.”
Peter Martin, FSB East Anglia regional treasurer, added: “Government is looking to small businesses to help rebuild the economy, but in many cases their growth plans are being held back by a lack of finance or overly complex banking practices.
“Nationally the FSB has been pushing for an independent redress scheme for the IRSA mis-selling scandal, as well as effective measures for lending to small businesses, and we look forward to seeing what the small business bank can offer.
“Last year’s forum was hailed as a real success, but with the emergence of new issues like IRSA and a need for improved competition, we feel there is still a need to bring businesses, banks and MP’s together to work on the above issues, and encourage a constructive dialogue between all, with business able to ask questions on what really matters to them.
“We aim to improve access to finance on reasonable terms and improve the opportunity for business to find the source of finance they need to survive and grow.”n The FSB exists to aid all small businesses. To find out more, why not attend a branch meeting. To find out about the next Suffolk meeting please visit http://suffolkmeeting21jan13.eventbrite.com/ .