(8 years, 7 months ago)
Commons ChamberBefore we get into the detail of the questions I want to ask the Minister, I think it is important for me to provide some context and background on the issue.
The Connaught Income Fund Series 1 was established in April 2008. The aim of the fund was to invest in bridging loans, primarily through a company called Tiuta International Ltd. Regulatory demands resulted in the fund being operated by a Financial Services Authority-regulated firm. In the case of Connaught the initial operator was Capita Financial Managers Ltd.
Capita issued the first investment memorandum as the fund’s promoter under section 21 of the Financial Services and Markets Act 2000 in April 2008. In September 2009 Capita Financial Managers resigned and the role of the operator was transferred to Blue Gate Capital management. At the time this decision was taken, a meeting between representatives of Capita Financial Managers and Capita plc was held. Minutes of this meeting, which are in the public domain, confirm that Capita was, at the very least, concerned about Tiuta’s financial viability and was aware of the false representations promoted to investors within the information memorandum. However, despite this level of knowledge and concern about the viability of Tiuta and the improper use of moneys invested in the fund, Capita, upon transferring the operator status to Blue Gate Capital management, did not inform existing investors of its concerns. That is despite the fact that Capita did write to existing investors informing them of the change of operator.
I congratulate the hon. Gentleman on securing this debate, and the number of Members who are present is an indication of the interest in this issue. Does he agree that the Financial Conduct Authority should publish the issues that resulted in it withdrawing from negotiations with Connaught and other parties so that, importantly, those who lost out in the collapse of this fund can know who they have cause to claim against and to blame?
(8 years, 9 months ago)
Commons ChamberI would certainly say there is a need to look in detail at the way RBS is performing. There are questions still to be asked about the corporate culture within RBS and questions raised by the Banking Commission need to be looked at.
It is important to state that this is not a left-right political argument. There are think-tanks on the right that think we should look again at the UK banking model. There was strong agreement when my hon. Friend the Member for Wycombe (Mr Baker) stated that the loss of the mutual in the 90s was a mistake for the financial structure of the UK. This is not a left-right argument; it is about trying to get things right and ensuring that, as a result of intervention in the market that we did not want to make, we deliver a better banking system. It is important to state that the reason for intervention in the market was much wider than making a profit for the taxpayer: it was to ensure the UK economy was protected at a very difficult time.
I have been listening to the debate in my office. One thing that has not been mentioned yet is the position of Ulster Bank customers. The first time the computer glitch happened, the Democratic Unionist party went to meet the chief executive officer of the bank. For a number of days, people had no access to money. That has happened not once, but at least three or four times. Ulster Bank customers had no access to their bank or credit cards for days and sometimes whole weekends—no money. Does the hon. Gentleman not feel that the banks need to sort out their systems? Let us make sure they have a system that works and that customers have the quality service they deserve.
I am absolutely aware of the problems with Ulster Bank—not only computer glitches but undoubtedly questionable past behaviour—and I associate myself with the hon. Gentleman’s comments.
When hon. Members talk about the need to sell RBS shares at a profit, it is important to bear in mind the context. The intervention was not just to make a profit; it was an intervention to ensure that we protected the UK economy. It gave people confidence in the financial system.
We need to address some of the concerns specific to RBS from a small business perspective. I speak as the former chair of the all-party group on the mis-selling of interest rate derivatives, which now has the much snappier name of the all-party group on small business banking. I would be delighted if I never had to speak about RBS again in my entire life. I would delighted if I did not have to talk about the mis-selling of financial products for small businesses ever again. Yet again, as I mentioned earlier, I was with the FCA for three hours. I spent four hours in a redress meeting between a small business and RBS, and I have had various meetings with RBS staff in relation to some of the articles that have appeared in the press during the week. There are still issues that need to be resolved. The Treasury needs to have confidence that when it talks about moving RBS back into the private sector, it does so with a full grasp of the problems that RBS still faces.
One concern is that the excellent Treasury Committee report into small business banking and finance for small businesses has not, as yet, received a response from the Treasury. I asked a question about this, but as yet no response has been forthcoming. The report makes very critical comments about RBS, among others, and the potential liabilities still faced by RBS, among others. I am therefore at a loss as to why the decision has been taken to return RBS to private hands when the Treasury has not even responded to the concerns raised by the Treasury Committee. I would like to see that issue at rest.