Pressure grows on Cable as mis-selling crisis deepens Officials at the FSA are currently pouring through information provided by the banks as well as meeting with businesses that claim to have been hit by mis-sold hedging products, as well as solicitors and independent experts who have worked on mis-selling cases. In these meetings, FSA staff have been told in forensic detail exactly how staff working for the investment banking arms of the lenders persuaded, cajoled and even threatened small businesses into buying hedges they, in many cases, neither wanted, nor understood. One publican who asked not to be named, explained that he and his wife had been on the receiving end of more than a year of high pressure sales tactics from Barclays Capital employees before he finally relented and took out the hedge the bank so desperately wanted him to buy. The results for his business have been catastrophic and he has been left nursing more than £100,000 extra costs just to service the hedge as well as the shocking revelation that to cancel the contract would now cost him hundreds of thousands of pounds more. Another Barclays customer, Mehmet Bay, an east London Turkish patisserie owner, was sold an interest swap by the bank despite speaking virtually no English. In Mr Bay's case, he has been lumbered with more than £300,000 in extra costs and has been told that to break the contract would cost him something in the region of £500,000. Mr Bay and his wife are preparing to take legal action against Barclays to recover their costs. The cases are by no means limited to Barclays. State-backed lenders, Lloyds and RBS, as well as HSBC, have all been accused by small and medium-sized business clients of the systematic mis-selling of complex derivatives despite knowing the customers in question had little way of assessing the value of the products and were often under heavy pressure to buy them if they wanted approval for their loan. There has been a distinct increase in the number of people claiming they have been mis-sold. I think a lot of people thought they were on their own and blamed themselves for being stupid, but once they realised many others were in the same boat they have been prepared to make a complaint," said James Ducker, a former salesman of the interest hedging products. Bully Banks, a website started by a group of mis-selling victims, has seen hundreds of businesses sign up to its newsletter. The organisation has also encouraged its members to contact their local MPs to give their campaign political momentum. At the present time, more than 100 MPs have been contacted by constituents claiming to have been mis-sold, and at a meeting in Westminister last week more than 30 MPs gathered to hear more details of the cases. Guto Bebb, a Conservative MP, has taken a lead on raising the issue with fellow politicians and is calling for a full parliamentary debate to discuss the problem. Mr Bebb is also calling on the Treasury Select Committee to haul in representatives of the banks to give their account of the issues surrounding potential mis-selling claims. Andrew Tyrie, the chairman of the committee, was among those to send a representative to the meeting and earlier backed the push to get the FSA to launch an in-depth review of the mis-selling allegations. The issue has gained cross-party support, and as The Sunday Telegraph reports today, Labour shadow small business minister, Toby Perkins, and Chris Leslie, shadow treasury minister, have called on Business Secretary, Vince Cable, to amend the upcoming Financial Services Bill to make it easier for small businesses to complain about mis-selling cases as well as endowing the regulator with new powers to intervene. This is a very significant issue. We are very concerned that at a time when we want banks to be improving their relationships with small businesses the opposite is happening. We want to see the banks being a lot more transparent on this," says Mr Perkins. As such, he has written to all the chief executives of the largest banks asking them to provide more information on the potential scale of the claims they face and what can be done about them. James Ducker is among those trying to find a solution to the growing problem and since leaving the banking industry he has set up a business advising those who claim to have been mis-sold. Mr Ducker believes that forcing the banks" backs against the wall will ultimately prove counter-productive and wants to first offer them the chance to participate in a new independent complaints handling scheme that would aim to deal with cases more quickly and cheaply. However, the banks might baulk at Mr Ducker's £10bn to £20bn estimate of the potential cost of compensating customers, which would put swap mis-selling claims well in excess of the roughly £5bn the banks have put aside to pay out payment protection insurance claims. "I really hope the banks accept the offer we are going to make," says Mr Ducker. If the current behaviour of the banks is any guide, then Mr Ducker's hopes are more than likely to be dashed. Lawyers and derivatives experts say that in the last month the stance of some banks has hardened and routine requests for information are being blocked or subject to repeated delays. "I can only do my job if I have access to pretty detailed information on the way a product was sold, but getting this information out of the banks has definitely got more difficult," says Abhishek Sachdev, another former derivatives salesman who is now advising mis-selling victims. "The banks know the records of most small businesses can be pretty limited and that by making access to the sales information tricky they can make it virtually impossible to make a case against them," says Mr Sachdev. Several businessmen also described being put under intense pressure by the banks not to make claims against them, with threats of everything from having their loans pulled to being forced into receivership. We had one meeting where the bank representative became very threatening towards us. I was shocked at what he was saying and very worried about the implications for the business," says one property developer currently involved in a dispute with his bank, who asked not to be named. The bank has all the power. We are just a little guy, they could pull the plug on us at any time," says the businessmen, who has been in a dispute with his lender for more than two years. Paul Adcock, owner of Norfolk electricals retailer, Adcock & Sons, has been anything but quiet about his claims that Barclays sold him a complex derivative that the bank says will now cost him more than £200,000 to cancel. In the last month, Mr Adcock has become one of the main campaigners on the issue, and has met with the FSA and MPs to tell them about his experience and those of other businesses that have been mis-sold hedges. The tide is definitely turning. The bottom line is that we just want justice and to be put back in the position we were before the bank sold us this product," he says. Such has been the public sympathy elicited by Mr Adcock's case, local competitors have offered to help him purchase stock to keep the business running. The support has been amazing. People recognise the importance of the campaign, it's a bit of the Dunkirk spirit," says Mr Adcock. The legal assault on the banks is gaining force too. Earlier this month, QA Legal went live, which will provide independent advice to mis-selling victims. The group is the brainchild of a group of lawyers and aims to provide a faster means to assess claims. Among the lawyers signed up is Professor Julian Roberts, a British and German qualified lawyer, who has successfully brought similar cases in Germany. Speaking to The Daily Telegraph earlier this month, Professor Roberts said: "In Germany the courts have come round to seeing these are not standard contracts, but effectively wagers. We have been working on these cases for five years and it has been an uphill struggle that has taken a lot of work. There also clear signs that insurers are becoming more prepared to provide after-the-event insurance for those wanting to pursue legal claims against the banks. "The provision of ATE gives me confidence that more insurers think this is what goes," says Mr Ducker. Paul Crawford, at Norton Accord, which has the support of three litigation funds to finance mis-selling claims, believes his firm will have gathered hundreds of cases by the end of the year. "We are brokering a lot of deals at the moment," he says, though he would not divulge how many the firm currently has on its books. However, even with all this movement there seems little chance of a court judgment on a mis-selling case for at least a year. Wand Properties, a Newport-based landlord, had been due to take Barclays to court this month, but settled weeks before the trial. Stuart Brothers, of SRBlegal which led the Wand Properties case, was among those to met recently with the FSA to discuss mis-selling and also presented at last week's meeting of MPs. "I think the issue is being taken very seriously by the authorities and I have been pleased with the engagement we have had," says Mr Brothers, who is working on several other major mis-selling cases. Perhaps the most significant development, though, will be the outcome of the FSA's own review of swap mis-selling claims. The review is due to finish at the end of next month, after which the regulator will say whether it thinks the matter is worthy of further inspection and potentially a formal investigation. Lord Turner is being kept personally informed and has privately indicated he thinks the banks could well have a case to answer. A full investigation by the FSA would be the clearest sign yet that, far from being the trifling issue that some of the banks suggest, swap mis-selling to small businesses has been endemic and is the next reputational disaster awaiting the banking industry.