Recently, the Bristol Cable had a fantastic write-up looking into the world of LOBO loans and the negative effects they have on councils across the United Kingdom. In the article, the Bristol Cable explains how Bristol resident Benedict Walmsley filed a complaint regarding Bristol Council’s use of LOBO loans after inspecting their financial records earlier in the year.
LOBO loans are long-term loans which contain complex structured derivatives. As it turned out, the council held £123 million in private-sector loans, making up just under 30% of its total long-term borrowing. Furthermore, between 2005 and 2010 it took out eight LOBOs, ranging from £10m to £25m, from banks Barclays, RBS, Dexia and Eurohypo. It was this heavy borrowing that provoked ire from Mr. Walmsley, other Bristolians and Debt Resistance UK, an independent campaigning group focussing on increased debt awareness.
When interviewed for the article, Debt Resistance UK’s Joel Benjamin was quoted to say;
“We’d like the Treasury Select Committee to look into this. We’d also like some of the more problematic loans to be referred to the High Court. We think there’s some legal avenue or some sort of government regulatory intervention possible whereby some of the worst value loans are declared illegal, and potentially the breakage costs could be removed or reduced under pressure from regulators or local authorities.”
Vedanta Hedging has long rallied against these LOBO loans and in the past has even given live oral evidence to a Select Committee of MPs in Westminster regarding these mis-sold loans.
To read more on the Bristol Cable’s article, feel free to click here.