RBS Global Restructuring Group and SMEs

Christine Jardine Excerpts

Thursday 18th January 2018 Commons Chamber

[Christine Jardine (Edinburgh West) (LD)]

I congratulate my right hon. Friend the Member for North Norfolk (Norman Lamb) on securing this debate on a subject that has cost so many of our constituents so much. Public dissatisfaction with the conduct and running of our banking sector has been one of the dominant themes of the past decade, much of it prompted by the behaviour and management of RBS, which, as the hon. Member for Stirling (Stephen Kerr) pointed out, is in the news again this week with regard to bank closures.

We should remember, however, that there is a wider issue. What we have is the banking system’s systemic failure to protect its own customers. We must not underestimate the impact on those customers, each of whom is an individual—a business person—with a family. Owners of SMEs have found that they are the victims of this systemic failure that has cost them their businesses and, in some cases, their homes. I have a constituent who has been pursuing a case for 10 years. Following a review by the FCA, he been awarded compensation, but he does not believe that that compensation takes into account the consequential losses of his business and property, and the costs of having to arrange another loan. He estimates that he is now more than £1 million worse off than before he went into business with this national bank.

In the decade in which my constituent has pursued his complaint, I am his third Member of Parliament to whom he has brought his case. We are still having to argue that the system is wrong and needs to be changed. His is typical of businesses caught in a trap without fair protection in law. For businesses that want to challenge a bank in court, the process is slow and expensive, and if they lose, they will have legal costs to pay on top of what the original problem might already have cost them. Where is the incentive for the banks to avoid malpractice and obey the law if they know they cannot be challenged because their victims cannot afford to take them to court?

That is exactly that situation that many of our constituents have found themselves in. They want their day in court, or at least the opportunity for a legal process to decide what is fair. Yes, we have the financial ombudsman, but that can only arrange fair and reasonable settlements as it sees it. What about those who feel—rightly or wrongly—that they deserve better than that fair and reasonable settlement and that the ombudsman’s view falls short? That is why I believe we need a tribunal system that will allow the many SMEs that have been mis-sold to and mistreated—some would say cheated—by the big banks the chance to feel that the system can protect them. The process would be cheaper and less formal, and complainants would not need a lawyer. We know that such a process works in other places.

The system has failed. It allowed malpractice that cost hard-working individuals their businesses and homes. This is an injustice that we have an opportunity—indeed, a duty—to address, and I ask the House to support the motion.