Bully-Banks was created to co-ordinate complaints by the owners of small and medium sized business against the conduct of Banks when mis-selling Interest Rate Swap Agreements (“IRSAs”).
It was created in December 2011 by a small group of business owners in the UK each of whom had been mis-sold an IRSA.
As of the end of January 2013 Bully-Banks is a campaign group of over two thousand members. The members are the owners of over one thousand small and medium sized businesses in the UK each of which has been mis-sold an IRSA by their bank.
It is worth emphasising what is being said in the above paragraph: every member of Bully-Banks has been mis-sold an IRSA by their bank.
The founding principles of Bully-Banks are as follows:
- Bully-Banks represents the interests of those owners of small and medium sized businesses that have been directly affected by the mis-selling of IRSAs.
- Bully-Banks is commercially independent.
- Bully-Banks is politically independent.
- Bully-Banks acts as a means of communication between members.
- Bully-Banks provides a forum for the views of our members.
- Bully-Banks advises, supports and acts as an advocate for our members.
Bully-Banks will not seek to sell any service or product to any person.
The substantial majority of the complaints of the business men and business women who are members of Bully-Banks have most of the following elements:
- The complainant is dependent upon finance provided by their Bank. Without that finance they could not continue in business.
- Their Bank sold them the IRSA when loan facilities were being granted or extended.
- Their Relationship Manger advised that the Bank believed interest rates were at an historic low and were going to rise in the medium term.
- Their Relationship Manager warned that the Bank was concerned about the complainant’s ability to finance their loan if interest rates were to rise significantly.
- The Relationship Manager introduced the concept of the IRSA to the complainant – an IRSA is normally outside the knowledge or experience of the complainant.
- The Relationship Manager stated that the IRSA was something that the Bank wanted the complainant to enter into and either made this recommendation as part of the grant of the loan facilities or stipulated it as a requirement as part of the grant of the loan facilities.
- The Relationship Manager then introduced an expert from the appropriate division of the Bank to arrange the IRSA. The expert was introduced as an advisor. No mention was made of the fact that in fact the expert was a salesman earning significant levels of commission on the sale of the IRSA. (No mention was made of the fact that in many cases the Relationship Manager also had annual targets to sell IRSAs.)
- The Bank typically booked a significant profit on the sale of the IRSA even though no mention of this profit to the Bank was made at the time the complainant was advised that the Bank wanted the complainant to enter into an IRSA.
Once the complainant entered into the IRSA they were locked into a crippling level of charge under that IRSA when interest rates fall substantially. In nearly every case of those registered with Bully-Banks, at the time of sale no mention was made of the cost of terminating the IRSA or if mentioned it was described as a small cost or a modest cost.
In reality the cost of terminating the IRSA when interest rates fell was very substantial and often locked the complainant into the IRSA.
The complainant could not re-finance with another party because of the continuing cost of the IRSA sold to them by their Bank.
Because the complainant could not re-finance, their Bank was able to substantially increase its Bank charges and “justified” that increase by reference to the complainant’s worsening financial position because of their obligations under the IRSA sold to them by their Bank.
This site is addressed to the owners of small or medium sized businesses who are currently facing problems with their Bank because they entered into an IRSA under circumstances similar to those outlined above.
Bully-Banks is asking every owner of a small or medium sized business who believes they have been mis-sold an IRSA to register with Bully-Banks. Together we can ensure that this issue is debated in the media and can optimise our actions as we go forward to force the Banks to remedy the problems which they have created.
To register as a member of Bully-Banks please click on the icon at the top of the page and then complete the registration form. Please remember to reply to the automatically generated email after you have submitted the completed registration form. If you do not do this you will not be registered as a member of Bully-Banks.
Bully-Banks has already generated a great deal of media coverage. The mis-selling of IRSAs has been investigated by the Financial Services Authority (“the FSA”) in the UK and is the subject of a campaign in Parliament. On Thursday 22nd June 2012 the mis-selling of IRSAs was debated in in the Houses of Parliament in London (if you go to the News section of this website you can access the Hansard record of the debate). What is most impressive is the fact that every speaker in the debate whole heartedly supported the owners of the small and medium sized businesses which make up our membership. The Minister’s response on behalf of the Government also acknowledge the reasonableness of our complaint.
On 29th June the FSA announced an agreement with the banks in connection with the mis-selling of IRSAs. The FSA accepted that the mis-selling of IRSAs had occurred (which was a very positive development) but the agreement reached with the banks wholly failed to provide appropriate remedies to those who had been mis-sold IRSAs. Our lobbying campaign is now focused on addressing this failure by the FSA.
Bully-Banks has already made a substantial contribution to the raising of this issue in the UK. Bully-Banks is now working hard on the next phase of its campaign in the UK: a submission to the Treasury Select Committee and further lobbying of Members of Parliament. It is also beginning to address a number of legal issues in the UK which have arisen in connection with the mis-selling of IRSAs.
Sky News interviewed Jeremy Roe of Bully-Banks in June of this year. In the interview Jeremy sets out the essence of the complaint by Bully-Banks’ members. The interview is available via this link: http://vimeo.com/46156508 or watch it below (35 mins long).
The European Dimension
Although Bully-Banks has its origin in the UK it is now becoming clear that the issue of the mis-selling of IRSAs has a European dimension. We are now being approached by small buisness owners in other countries in Europe who have also been mis-sold IRSAs. We welcome owners of small businesses in Europe who have been mis-sold IRSAs. Just register as a member of Bully-Banks in the same way as UK residents do. We will allocate registrations on a country by country basis as we receive them.
We will work with those owners to establish their Bully-Banks’ campaign in their coutry and together we will also address this issue at the European level. We have identified a simple methodology for raising this issue and efficient means to promote our campaign. We will share them with those European owners who have also been mis-sold an IRSA by their bank. Our approach is quite simple: alone we have no power, together we have influence.
The Telegraph and The Sunday Telegraph have been excellent in raising this issue and you can read many of the relevant articles from these two papers in the “News” section of this website. In addition numerous other articles from other newspapers and journals are availabe in the “News” section. If you have any doubts about the seriousness of our campaign read the articles in the “News” section of this website.
Many of the individuals whose stories are covered in these articles are members of Bully-Banks.
Two useful articles setting out the legal background to the issue in the UK are set out below.
- Interest Rate Swap Claims by Stevie Loughrey of Carter-Ruck (a firm of Solicitors). A very good introduction to the legal issues that arise out of sale of IRSA by Banks to their customers.
- Derivatives Claims Against Banks (pdf). Explaining the legal background by Stephen Rosen of Collyer Bristow.
The Bully-Banks’ Members’ Survey
Bully-Banks asks all of its members in the UK to complete a Survey. The Survey is over 200 questions long and takes about an hour to complete. (Only Bully-Banks’ members are authorised to complete the survey.)
If you register as a UK member of Bully-Banks we ask you to then go to www.bully-banks.co.uk/survey site and complete the Survey. It is in three parts and there are 202 questions. Please complete it in one sitting.
We will not disclose any information provided to Bully-Banks in a way that will identify a buisness or a business owner unless that business owner expressly agrees to such disclosure.
It is not compulsory however and if you are fearful about disclosing this infomation do not complete the Survey until you feel comfortable about doing so.
We will shortly produce an separate survey form for Dutch, German and French members.
The Bully-Banks Report to the FSA
On 22nd June 2012 Bully-Banks submitted a Report to the Financial Services Authority. The Report was entitled: The Case Against The Banks – The Mis-Selling of IRSAs. The Report is available for you to read by going to www.bully-banks.co.uk/survey-results
That Report was based on the answers of well over 200 members of Bully-Banks. The replies to the Survey enabled us to evidence our statements in a most powerful way. The replies to the Survey gave the Report credibility.
As this isssue continues we need to enhance our credibility. That is why we continue to ask members of Bully-Banks to complete the Survey. Every completed Survey reinforces our case. In the next few months we intend to issue a second Report to every member of Parliament. That second Report will contain the updated results from the Survey.