Barclays to do more to help SMEs in financial distress

Barclays has confirmed to the IB Times that it will suspend all interest rate swap agreements or IRSA payments for SMEs that are suffering large financial problems which have placed them officially in distress.

A Barclays’ spokesperson told the IB Times UK that Barclays is going to go through its SME customers and, case by case, suspend any swap payments if they are found to be in financial distress based on the scope of an FSA (Financial Services Authority) review. They added that any customers that are in financial distress will also be able to seek out the help of the Barclays Business Support Specialists.

The move is thought to be a real turning point for the thousands of SMEs that are in financial hardship because of the high IRSA payments that that have to make on a monthly basis. Many of the business claim that they were mis-sold the IRSA loans years ago which is one reason why Barclays has taken a step forward.

On June 29th of this year HSBC, Barclays, RBS, and Lloyds were all banned by the FSA from selling the products to SMEs again and as part of the deal were told to review the products they had sold to determine if a product may have been mis-sold to a SME. If they determined that mis-selling had taken place then it was up to them to make proper compensation.

IRSAs are contracts that are made between a customer and a bank in which one side has to pay a variable or floating interest rate and in exchange receives a fixed rate of interest payments. They are often used to hedge against the possibility of a large market shift but can build up when the economy recovers leaving them to owe quite a bit of money in the end.