Commercial Financial Dispute Resolution Platform

Calum Kerr Excerpts

Thursday 15th December 2016 Commons Chamber

[Richard Arkless (Dumfries and Galloway) (SNP)]

I add my thanks to my hon. Friend the Member for East Lothian (George Kerevan) for securing this very important debate, which has caused a number of Members to be contacted by constituents who own small businesses and have been fleeced and mis-sold the most awful and inappropriate hedging products, leading not only to economic disaster but, as many have said, mental health problems; there have also been other effects on health and wellbeing. My hon. Friend made an excellent speech, as always. He set the tone of the debate perfectly by saying that this is a time to move beyond individual cases. Clearly, we all have these cases, but he meant that we need to look beyond discussing them and see whether we can come to some form of permanent solution.

[Calum Kerr (Berwickshire, Roxburgh and Selkirk) (SNP)]

I commend my hon. Friends for turning up in numbers. I am sure that everybody across the House has constituents deeply impacted by this, and it is disappointing, despite Christmas and all, that the House is so poorly attended. Will my hon. Friend join me in praising the work of Richard Samuel, who back in May, when we first looked at this idea, drew the parallel that we have been discussing? Will he commend my hon. Friends for bringing forward—I hope that the Government will see this for what it is—proactive suggestions as to how we improve things? Yes, we rage against the system, but we are trying to be proactive and work with the Government to improve the world for small businesses.

[Richard Arkless]

I entirely agree. My hon. Friend puts his point passionately and very well. It is time for mourning to stop and for solutions to be found.

My hon. Friend the Member for East Lothian made an incredibly important point about the link between low productivity levels in the UK and the threat and the pressure that small and medium-sized enterprises have been under, particularly since 2007-08. There is no smoke without fire. I am convinced, having listened to him, of the causal link between the problems that we are discussing and low productivity of SMEs.

I was particularly struck by my hon. Friend’s comments about arrangements between solicitors’ practices and large banks. I declare an interest of sorts, in that I was a practising solicitor who was seconded to a large financial services organisation. How it works is very peculiar. I was given to the bank for free by my firm, and the bank created a so-called value account. My salary was set into this value account, which triggered work for my firm. We can see the problem that SMEs have in trying to find highly reputable, highly skilled corporate lawyers; they are all working for firms that have these links with the banks. These firms do not bite the hand that feeds them; they need this work. That is another manifestation of the complete inequality of arms between SMEs and large financial services organisations. My hon. Friend was right to say that banks’ terms and conditions—the secret terms of the contract—have evolved over the years, further exacerbating the inequality of arms.

My colleague on the Justice Committee, the hon. Member for Henley (John Howell), made a very interesting point—I was grateful to him for taking my intervention—about alternative dispute resolution clauses in contracts. While I would clearly welcome ADR clauses in all these types of commercial contracts, I am slightly confused, because I have never seen them in the case of these hedging products. As to asking banks to incorporate these clauses voluntarily, it stands to reason that the commercial risk will drive whether they are included. We are talking about risky derivatives. Have we ever seen ADR clauses in hedging product contracts? If not, I have no idea how we could persuade the banks to incorporate them voluntarily, given the risk.