Mr. Cormac Butler:

This issue has been picked up in both the UK and Ireland. It is wrong to change a term loan to an on-demand loan. It is simply illegal. There is a second point to be made. Many of these companies were sold what are known as "hedge products". A loan would be given for 20 years but then the customer would be told it would be an on-demand facility and asked to take out a fixed-rate swap. The customer might sign up to that not fully understanding what is going on. The problem is that if a lender gives a customer a fixed-rate swap on an on-demand facility and interest rates go against the lender and in the customer's favour, as it is an on-demand loan the lender can cancel it and demand the money the following day, thereby cancelling the swap. It was a one-way bet for the bank. It would make money if interest rates went down but would not lose money if interest rates went up. There was mis-selling, the consequence of which is that all of these small businesses were paying more interest than they should have been and that increase in interest pushed them into bankruptcy. It is a bit like the issue of tracker mortgages. Once the companies went into GRG they were subjected to a management fee and were also exposed to restrictions. Some were told that certain assets could not be sold and that approval was needed even to sell something like a car. There was the risk that GRG would delay such approval in order to create a distressful situation.