The government must investigate the behaviour of the high street banks and compensate Sussex businesses who were ripped off by 'toxic' insurance, said Caroline Lucas today.

A report in the Brighton Argus has highlighted how, between 2005 and 2008, thousands of businesses were told they could have a loan if they also took out a swap – a form of insurance designed to protect them from interest rate rises.

However, when rates fell during the financial crisis, charges soared to tens of thousands of pounds a month.

Barclays, HSBC, Lloyds and RBS agreed to review the sales in June after the Financial Services Authority (FSA) said it had found “serious failings” in the way the instruments were sold.

The Brighton Pavilion MP, who has helped to set up an all-party group in parliament to better represent those businesses affected, said:

"The high street banks have an incredibly serious case to answer over the scandal of the “toxic insurance” sold to small businesses across Sussex.

"Having met with business owners in my constituency who were mis-sold these toxic products, I know that many now face real financial problems and are understandably anxious about trusting the banks again.

"And since small business owners are often wary of speaking out about issues with their bank for fear of damaging their business reputation, this is likely to be just the tip of the iceberg."

She continued:

"Small and independent businesses are the life blood of Brighton and Hove's economy and the government has a responsibility to support them, not stand idly by while the banks rip them off.

"As well as helping to set up an all-party group in parliament, I’m backing calls for an immediate inquiry by the Treasury Select Committee to find out how the mis-selling was allowed to occur.

"The government must now act to ensure that the Financial Services Authority puts a stop to the bullying behaviour of the banks, and to make sure those affected receive adequate compensation.

"More must also be done to make sure the banks lend to businesses so that local enterprises in the city can flourish."

ENDS