Banking Misconduct and the FCA

Alister Jack Excerpts

Thursday 10th May 2018 Commons Chamber

[Mr Alister Jack (Dumfries and Galloway) (Con)]

I thank the Backbench Business Committee for granting this very important debate and I thank the all-party group on fair business banking for securing it. There are literally thousands of victims of this banking scandal. They are victims not of banks, but of bankers and their advisers who colluded with them—make no mistake about it.

This has not been a golden era for British banking and neither has the FCA covered itself in glory. It has presided over ad hoc redress schemes that are simply not fit for purpose. It has allowed banks to be judge, jury and executioner. It could learn from the best British regulator, the Takeover Panel. If one goes to the Takeover Panel for a decision on a Thursday, one receives it on a Friday. The FCA has allowed the banks to set up their own redress schemes, which have gone on too slowly for too long and have been too small in terms of financial retribution.

Victims have been fighting this situation for years. Their lives have been destroyed: it is not just livelihoods, some have lost or taken their lives. Families have been torn apart and businesses have been lost. Frankly, they have been the victim of banking piracy. I said that in the Treasury Committee yesterday and I say it again today. If the other banks have a pile six inches high, RBS-GRG has a mountain. It set up a scheme of £400 million. Some £100 million of that has been allocated to costs, leaving only £300 million to pay people back. It has paid out £150 million so far, but that does not even scratch the surface. GRG was a profit centre. In 2011, it made £1.2 billion in profit. Considering the profits it has made by knocking on people’s doors and taking their businesses away from them, £300 million is just scratching the surface. It is paltry and pathetic.

The fact that these crimes were committed is not something I am imagining. Excellent reports are available from Tomlinson and Promontory, as has been discussed. We knew crimes had been committed, but what the victims have not seen is any form of justice. I do not just mean financial justice. I mean prosecutions. For banking to clean up its act and for this not to happen again in the future there need to be more prosecutions.

In the first debate secured by the all-party group on fair business banking, I spoke of my own experience. I know at first hand how GRG behaved. I was not a victim. It came twice to try to take a very good asset away from us. The business was making a profit in each of the months when it came and it has made a profit in every month since. That did not, however, stop it trying to come up with artificial breach covenants and other trumped up reasons to try to create fees. I understand that people were under pressure. If they were not in a robust position after the financial downturn, they were, I am afraid, taken to the cleaners.

I will conclude by saying that the worst offender was RBS GRG. The perception is still there that it cannot be trusted to do the right thing. Proper redress for the victims would be a very good place to start.