MP urges Lloyds Bank to stop demands of £500k from Sheffield property business

An MP is requesting Lloyds Bank to stop its demands for payments of more than £500k per year from a small property business in Sheffield.

Natascha Engel, MP for North East Derbyshire, is urging the bank to freeze repayment requests from MidCity Estates, whilst an ongoing investigation into a mis-sold loan continues.

The business, which provides student accommodation across Sheffield, has been committed to making three payments per year of up to £220k to Lloyds since July 2011, as part of a fixed rate loan agreement, which replaced a controversial interest rate hedging/swap product.

The bank has since admitted to mis-selling the initial swap to MidCity, but has refused to acknowledge the repayment schedule is a result of the mis-sold loan, which is now under review by the FCA.

Ms. Engel has expressed her disappointment at the bank’s refusal to change its stance, despite a number of calls and letters over the years.

Natascha Engel MP commented: “Having followed the MidCity case for a number of years, I am extremely shocked by the complete disregard Lloyds has shown towards its loyal, hardworking customers.

“It’s enduring pursuit of high repayments only serves to demonstrate the bank’s greed and arrogance, taking advantage of its powerful position, leaving its victims close to breaking point this must not go on.”

At the time the loan interest rate was set, the Bank of England base rate was at a record low of 0.5%.

Ms. Engel added: “Setting a loan rate of 8% was no way justifiable or fair. They actively put MidCity at a disadvantage from the start of the relationship. I urge Lloyds to seriously reconsider their approach and show some compassion towards a client that has never defaulted, whilst the review is underway.”

Alison Loveday, CEO of law firm Berg, acting for MidCity, commented: “This is just one example of how small businesses continue to be mistreated, with the victims having no recourse, when both the FCA and the Financial Ombudsman Service refuse to intervene, and the cost of legal proceedings is too prohibitive.

“The fixed loan MidCity took out was meant to offer a better alternative to the swap, but has only served to benefit the bank, rather than our client. It is only fair that the bank, who claims to support small business, halts repayment demands whilst the review of the swap is underway.”

MidCity is one of approximately forty thousand businesses who were sold fix rate loans which typically contain an embedded or hidden swap, and which for regulatory reasons are said by the FCA to fall outside of its compensation scheme.

John Whittaker, director of MidCity Estates, concluded: “We feel totally let down not only by the banks, but the Financial Ombudsman Service and the FCA and are now stuck with high repayments for the foreseeable future.

“We have gone from running a thriving business to having serious financial worries in just a few years, through no fault of our own. I am now in my seventies and simply do not have time to wait whilst Lloyds continually put us under pressure, whilst at the same time fail properly to deal with our claim through the review scheme.”

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