Introduction: This letter is intended to be circulated cross-party to MPs and throughout networks of local government councillors in England, Wales and Scotland in councils (at least 2o0) affected by LOBO loans. The letter is calling for action from the Local Government Association (LGA), Ministry for Housing, Communities and Local Government (MHCLG) and HM Treasury (HMT).

LOBO loans are a national problem, caused by failure to adequately regulate and monitor the financial system – and to protect councils and taxpayers from mis-selling and market abuse by powerful financial firms.

We are calling for a political solution so that further taxpayer funds are not spent pursuing banks, brokers and advisors through the courts to attain justice.

If you are an MP or councillor and happy to add your signature – please add your name, council and political party in the signup section below.

If you are a local resident, ask your MP and councillors to sign the letter. You can get in touch with them by using the WriteToThem website.

Open Councillor Letter to the Local Government Association (LGA), the Ministry for Housing, Communities and Local Government and HM Treasury.  

As elected MPs and councillors in UK local government, we the undersigned are deeply concerned with reducing the burden of debt interest repayments on our constituents to protect jobs and local services from further cuts.

In the context of austerity and mounting service pressures we are disappointed by the lack of interest shown by the LGA in investigating and pursuing the brokers, banks, and advisors complicit in the mis-selling of £15 billion of Lender Option, Borrower Option(LOBO) loans. These risky and expensive loans have been mis-sold to more than 200 UK councils – exposed by C4 Dispatches in July 2015, and were the subject of a brief CLG inquiry.

Recently, Northamptonshire County Council with £150 million in LOBO loans, some paying interest rates of 7-11% was forced to issue a s114 notice. We know other councils will soon follow.

LOBO loans are not a party-political issue. Hundreds of councils of all political colour across England, Wales and Scotland are affected by this scandal. Blame cannot be heaped upon council finance officers alone.

CIPFA, along with MHCLG and the financial regulator, the FCA, must take responsibility for a local government financial system which allowed City firms to game the procurement process at taxpayers expense and acknowledge and address the failure of scrutiny and external audit safeguards.

This was a scandal foretold. In 2009 following the Iceland banking collapse, DCLG called on the FSA to investigate and regulate Treasury Management Advisors, yet the financial regulator refused. The FCA must now take firm action to hold companies like ICAP and CAPITA to account for their role in pushing LOBO loans upon town councils in order to maximise commission profit.

We call upon the LGA to demonstrate leadership by investigating options for legal redress for councils struggling under the burden of high interest rates loans, mis-sold by powerful financial firms, which town halls are ill-equipped to fight on their own.

Councils have been left alone to challenge the financial sector over LOBO loans and to date, litigation by 15 councils has been restricted to banks RBS and Barclays in relation to LIBOR rigging, ignoring the universal mis-selling issues perpetrated by CAPITA and Butlers.

LOBO loan mis-selling affects housing associations, councils, universities and police and fire authorities, and a cross-sector redress scheme incorporating the various peak bodies should now be investigated as a matter of urgency.

To avoid costly future scandals, we ask the LGA to ensure MHCLG and the FCA initiate a thorough investigation into the mis-selling of LOBO loans to councils. We also demand that the systems governing the procurement, benchmarking and public and member scrutiny of financial services within councils are tightened considerably.

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Signed:

First Name
Surname
Political Party
Role
Constituency or Local Authority
JohnWhitworthLabour PartyCouncillorNewham
AbhishekSachdevConservative PartyCouncillorHertsmere
MickScrimshawLabour PartyCouncillorNorthamptonshire
SamTarryLabour PartyCouncillorBarking and Dagenham
SianBerryGreen PartyCouncillorCamden
RkhsanaFiazLabour PartyMayorNewham
John GrayLabour PartyCouncillorNewham
TristanOsborneLabour PartyCouncillorMedway
MatthewBrownLabour PartyCouncillorPreston City
BrianSilvesterOtherCouncillorRope Parish
AndyStampLabour PartyCouncillorMedway
DanMcDonaldLabour PartyCouncillorMedway
TeresaMurrayLabour PartyCouncillorMedway
CliveJohnsonLabour PartyCouncillorMedway
RuthiBrandtGreen PartyCouncillorOxford
MartynRawlinsonLabour PartyCouncillorPreston City
PaulWoodheadGreen PartyCouncillorCannock Chase
KarenMccluskeyLabour PartyCouncillorNorthamptonshire
JamesMansfieldLabour PartyCouncillorNewham
ScottLeithConservative PartyCouncillorAberdeen
KeithLindsay-CameronLabour PartyCouncillorBath & North East Somerset
JuliaRichardsGreen PartyCouncillorBrighton and Hove
PedroGoffeLabour PartyCouncillorPeterborough
MatthewMahabadiLabour PartyCouncillorPeterborough
TonyMobbsConservative PartyCouncillorNorthamptonshire
RachelCooleyLabour PartyCouncillorNorthamptonshire
MaxineFryLabour PartyCouncillorCarmarthenshire
JoshuaGarfieldLabour PartyCouncillorNewham
JoannaCollinsGreen PartyCouncillorHigh Peak Borough Council

 

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