Bob Stewart
Main Page: Bob Stewart (Conservative - Beckenham)Department Debates - View all Bob Stewart's debates with the HM Treasury
(6 years, 3 months ago)
Commons ChamberTo be honest, I am surprised, if not shocked, that we are having to debate British banking misconduct in 2018. I suppose I must have been naive to believe for so much of my life that all banks, which I have always assumed to be pillars of the establishment, would deal properly, fairly and ethically with their customers. I assumed that one of their primary purposes was to help their customers to succeed in their businesses. It seems I was wrong in so many cases.
Equally, my eyes have been opened with regard to the Financial Conduct Authority. That body operates independently of the Government and its purpose is clear from its title: it is the financial regulatory body for banks in the United Kingdom and is supposed to ensure that they operate fairly as well as legally. But it clearly is not doing its job in the way it regulates how so many banks deal with small and medium-sized enterprises. The body is paid for by charging fees to members of the financial services industry. I am afraid that I must wonder whether that could sometimes influence the way it acts, or perhaps does not act, at least in some cases.
The reason I am speaking today in this debate is that the D’Eye family, all of whom are constituents of mine, have been hit for six by the Royal Bank of Scotland’s Global Restructuring Group and Dunbar Bank, owned by Zurich. From the story I have been told, Dean D’Eye and his family, and also his friends, have been terrorised by insolvency professionals working for GRG and Dunbar Bank. That is disgraceful. In my view, banks such as Dunbar and RBS, which have taken part in what I consider to be unethical piracy, must be brought to book. The FCA must play a much bigger part in doing this, rather than standing idly by.
We in Parliament have a duty to insist that loans and funding for our small businesses are regulated fairly, ethically and with sympathy for people trying to make a living and to boost our economy. We also need a mechanism to ensure that past wrongs are put right. To get all this, it looks like we may need a public inquiry. If that is the case, I fully support one being set up as soon as possible.
It is always a pleasure to follow the hon. Member for Strangford (Jim Shannon), although we usually do this in Westminster Hall, rather than here in the main Chamber. It is also a pleasure to be called in this debate and to congratulate the hon. Member for East Lothian (Martin Whitfield) on securing it, as it gives many of us an opportunity to speak up for businesses that were so badly treated by their banks. At a time when these businesses needed support and a relationship that looked to the future, they instead found short-term attitudes being taken by their lender, offering them little, other than something they did not want or the opportunity to go bankrupt. It was pretty obvious what the outcome of those choices would be.
My involvement in this has been prompted by the case of Rew Hotels Ltd, which has a number of hotels in my constituency. The business is family owned, and they have been developing and running their service for many years.
Thankfully, a stay in a Rew hotel is nothing like Fawlty Towers, although I understand that Basil Fawlty might be about to leave the country following one of this week’s votes.
I have only a short time, so will come back to what I was saying. Around 10 years ago, Rew Hotels was offered a hedge that it really did not want. Its bank at the time was Barclays. It was not a constructive discussion; it was basically a choice of the company either taking a hedge that it really did not want, that would cost it a large amount of money and that would not have any great benefit to the business, or trying to refinance multimillion-pound debt in the middle of a credit crunch. It was obvious what the choice was going to be. The company was saddled with it for several years, but in the end bought itself out. It is estimated that, all in, it lost around £850,000 in the process.
That £850,000 is not just a figure; as Tim Rew, whom the Minister has met, says, it is not just lost money but lost jobs, lost investment and lost opportunity. It is a lost chance to develop new rooms and facilities, and other things to bring guests into Torbay. This is not just a debate about what a profit margin might or might not have been. Fundamentally, there is a feeling of injustice that a small company has had to work to produce that for a very large banking corporation that could have done a whole lot better in its attitude and support.
The Minister will know from his meeting with the Rews that their next frustration came with the methods of redress. One of the initial offers was for them to be given some compensation and, oh yes, to sign up for another hedge. They did not want a hedge in the first place, and now they had the chance to sign up for another. It was literally ridiculous.
The potential alternatives for smaller companies are difficult. Rew Hotels was caught by the fact that, because it is a hotel group and has large numbers of waiting staff and general hospitality staff, it was classed as a slightly more sophisticated investor. I could understand that argument if it was a solicitors company, with 50 or 60 solicitors and accountants and a small percentage of non-professional staff. This company, though, was clearly going to be limited in its capacity to make a professional investment decision, yet because it has a large number of employees, it was designated as though it was a great expert in the financial markets, which was clearly unfair.
I was interested to hear the suggestion in the speeches of my hon. Friends the Members for Thirsk and Malton (Kevin Hollinrake) and for Brentwood and Ongar (Alex Burghart) about looking into a more tribunal-based approach to dealing with some of these cases. Rew Hotels feels that the existing system is like the banks marking their own homework and deciding to give themselves an A, and then saying that even along with compensation a company should have what it does not want.
I have every confidence in the Minister, who I know has an understanding of tourism, given his previous role. I hope that he will consider carefully some of the arguments made in this debate and that we can give companies and those who have been victims a proper system of redress, other than costly legal action.