Few acronyms are as apt as LIBOR, pronounced LIE-BORE. Repeated
banker's lies are a bore to every honest citizen. Let's remind
ourselves how critics assert they got this unenviable reputation?
Through a coiling miasma of mis-selling, that's how. They mis-sold
mortgages and helped to fuel a global recession. They mis-sold PPI
and continue to pay the price. They mis-sold interest rate swapping
and the recriminations are just beginning.
Libor is one of the bedrocks of our financial system:
residential mortgages, company loans, deposits, inter-bank
borrowing, and derivatives are all based on it. On 16th March our
blog 'Definition of an SME: Small, Medium and Excluded' implored
business secretary Vince Cable to use his political clout to get
the banks to help SMEs. Libor appears to have strengthened his
resolve to do so; or at least it has increased his rhetoric.
Cable told the BBC's Andrew Marr show (08/07/2012): "The banking
culture is anti-business; it doesn't focus on the long-term. It is
throttling the recovery of British industry because companies
cannot get loans to expand their business." Hallelujah and thank
you Mr Cable! And, the opposition is getting in on the act too,
with Ed Miliband calling for 'more competition' and Ed Balls
wanting 'root and branch' reform.
Meanwhile, SMEs wait for the money. It's not just the banks that
have short arms and long pockets. As suppliers, SMEs too often find
themselves waiting to get paid. Big businesses are all too often
the culprits, as John Walker, national chairman of the FSB can
testify with 75% of his members experiencing late payment. Once
again we can look to the Government to improve the situation, this
time with the Prompt Payment Code. To date, 25 of the FTSE 100
companies have signed the code, a voluntary undertaking to pay
suppliers on time.
The code once again unites political parties with Labour MP
Debbie Abrahams saying: "In the current climate I cannot imagine
why a multi-million pound company with a healthy balance sheet
would not be prepared to lead by example and sign up for the code."
Phil Orford, chief executive of the Knutsford-based Forum of
Private Business agrees: "The code asks nothing more from
responsible businesses than to pay suppliers as and when agreed,
without changing terms and conditions retrospectively."
Libor has over-stepped the mark; an action that demands a
reaction. If its aftermath should trigger better access to finance
and improve the flow of credit, then it will leave a positive
legacy few could have imagined. Not least among SMEs who hold the
key to growth and prosperity.