Banking Misconduct and the FCA

Bambos Charalambous Excerpts

Thursday 10th May 2018 Commons Chamber

[Martin Whitfield]

Absolutely. On dispute resolution, the introduction of a tribunal would be an important and essential step forward, giving access to people and businesses that at the moment struggle to gain access to the courts.

[Bambos Charalambous (Enfield, Southgate) (Lab)]

My constituent Mr Kashourides, who has no confidence in the FCA or the ombudsman, has himself brought legal action against RBS, but he has been asked by a judge to pay £150,000 as a surety for costs, because the lawyers that RBS employs are very expensive. Does my hon. Friend agree that a tribunal would be the best way forward?

[Martin Whitfield]

Absolutely. The cost of bringing a case to get rectification is so important.

The FCA has repeatedly said that it does not have the powers to deal with commercial lending and that it is up to Parliament to decide if it wants those powers to be extended. However, in various statements, the Treasury has repeatedly stated that this is a matter for the FCA and that if the FCA feels it needs more powers, it should ask for them. All that is happening is that this hot potato is being kicked between two different areas, and we are not getting answers that, in reality, are satisfactory to anyone. I would appreciate clarification from the FCA on the parameters of what it needs in order for it to ask for more powers. At the moment, we are seeing the widespread and systematic destruction of British businesses, which in my mind certainly seems to qualify as a reason to request additional powers.

The lack of mechanisms for redress and of action in general has severely undermined public confidence in the integrity of our system, and it is time that we tackled this head-on. We are therefore calling today for a full public inquiry into the ecosystem of commercial lending, and particularly into the treatment of businesses in financial distress. This cross-departmental issue covers both the Department for Business, Energy and Industrial Strategy and the Treasury, so it is too wide-reaching to come under the remit of just one Select Committee in Parliament.

I will briefly turn to the role of professional advisers and the wider issue of commercial funding. I welcome the focus that section 166 has placed on the inherent conflict of interest that exists between financial institutions, surveyors, lawyers and insolvency practitioners. For too long, we have focused solely on financial institutions, but not on the professionals that support them, often in the form of secondments from within the walls of the very financial institutions themselves. Frankly, it beggars belief that this is an accepted industry practice. The mechanisms involved in taking control of businesses and their assets are operated via LPA receivers and insolvency practitioners.