Abhishek Sachdev is Chief Executive of FCA-authorised advisory firm Vedanta Hedging, and is a Conservative Councillor in Potters Bar. With Matt Warman (now MP for Boston and Skegness) he instigated the FCA Review for mis-sold derivatives in 2012, which provided redress of £2.2 billion to 18,200 small businesses.

The exploitation of Britain’s small and medium sized businesses by the UK’s big banks and financial institutions shares disturbing similarities with the abuse of power by Harvey Weinstein across Hollywood.

The A-listers of the silver screen, who knew how badly their erstwhile friend was behaving, kept silent for fear of the repercussions. In the case of UK banks behaving badly, the Government has been equally reluctant to bring in the bottom-up reforms which would empower their victims to get the justice they deserve.

Too many of Weinstein’s victims found themselves advised by lawyers to take a pay-off and shut up, such was the skewed balance of power between the abuser and the abused. It is a classic example of the misuse of power to prey on the vulnerable. The system of redress failed so abysmally that serial offences continued for years until it reached a point of crisis too vast to contain.

Such exploitation of influence is not limited to people abusing power for self-gratification; there has been a proliferation of stories of corporate abuse of position for money. The PPI scandal is just such a case in point. Credit card issuers used their position to require customers to subscribe to highly lucrative payment protection insurance as a condition of approving credit. The Government rightly found this practice to be exploitation of the asymmetry between large financial institutions and individual customers.

Small- and medium-sized businesses were also exploited by banks, but they have had less luck in obtaining redress. Many were required to buy a different type of protection – interest rate derivatives, a form of hedging to “protect” their ability to make interest payments. Whilst these products can effectively provide insurance against rising interest rates, unlike traditional insurance contracts there can be serious financial risks posed if interest rates fall. Like PPI for retail customers, these instruments often came at great cost to the business and even greater profit to the bank. The nature of those derivatives meant that when interest rates fell, many businesses found themselves exposed to huge losses. The banks secured their exposure against the business’s assets, often without the business being aware of it.

Business customers bought products like these believing the banks were acting under their regulatory codes, which are found in the FCA handbook and called Principles of Business (PRIN) and Conduct of Business (COBS). These rulebooks include such requirements as “a firm must act honestly and professionally in accordance with the best interests of its client” and “A firm must conduct its business with integrity.” Yet for years, the banks have casually ignored their statutory obligations, knowing that business customers could not sue them for breaching their own codes of conduct. This has been confirmed by one recent case, Crestsign v RBS, where the judge accepted that RBS gave ‘negligent advice’ to Crestsign, but due to the small print of the bank disclaiming any advice they gave, the judge had to find for RBS – such is the apparent ability of banks to contract out of their regulatory obligations.

This gives the banks a ‘get out of jail free’ card, enabling them to routinely breach their own regulatory codes to grow their own profits at the expense of their business customers. The FCA’s independent review of RBS Group’s treatment of SME customers referred to RBS’s Global Restructuring Group (“Bad Bank” as it is colloquially known) found what it regarded as “instances of inappropriate treatment” on the part of RBS in a whopping 86 per cent of cases reviewed. Furthermore, the review found that in around 16 per cent of cases the businesses sampled had experienced inappropriate action by RBS which “appeared likely to have caused material financial distress”. This “minority” represents around 950 businesses, together with their thousands of owners and employees.

Such systemic exploitation can and will continue as long as the banks settle and hush up the complaints where they are at risk of losing in court. In my own career as a hedging adviser, I have seen hundreds of instances where clients are forced to sign confidentiality agreements as a condition of settlement of a case they have brought against the banks. Hushing up difficult complaints is straight out of the Weinstein playbook and it is why, of the hundreds of cases brought against banks by SMEs, only a very small minority, perhaps one in 100, make it to court. The banks are extremely selective of which cases they will allow to reach a judgement. The only time they don’t pay hush money is when they feel sure they will win in court.

Without the legal right to force the banks to comply with their statutory obligations, many businesses are pinning their hopes on the regulators stepping in. Yet just last week, the FCA did not publish the full report of the independent review into RBS’s Global Restructuring Group (as was intended) because they did not want to risk being sued by RBS. What more evidence do we need of a broken system, when the regulators themselves are operating from a position of fear of the banks?

Thousands of businesses have suffered material harm as a result of sharp banking practice against which they have no recourse. As the cases mount up, you have to ask what it will take for British enterprise to have its own ‘Weinstein moment’ and finally declare that enough is enough.