Banking Misconduct and the FCA

Joanna Cherry Excerpts

Thursday 10th May 2018 Commons Chamber

[Martin Whitfield]

Again, I am grateful for that intervention. Clearly, at the end of the day, this goes to the question of a public examination of what has happened and where things have gone wrong. RBS is obviously still held by the public through the shares we bought when we bailed it out, but even without that, there is still a responsibility to make sure that the banking and financial sectors apply rules and laws equitably, fairly and transparently, and do not seek to put down small and medium-sized businesses to their own benefit.

[Joanna Cherry (Edinburgh South West) (SNP)]

I endorse what the hon. Gentleman is saying because there is a real issue about redress. The lives of my constituents Mr and Mrs Neave have been ruined by this UK banking episode. I have seen their reams of correspondence with the FCA and the ombudsman, yet all these organisations ever seem to say is that there is no case to answer. People then turn to their MPs, but there is nothing we can do. Is not the time ripe for the UK Government to ensure redress, perhaps by way of a tribunal process or something like that?

[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.

--- Later in debate ---

[Kirsty Blackman]

This has not been widely covered in anything that has been published so far in relation to GRG. It would therefore be incumbent on any inquiry to take that into account.

The hon. Member for Thirsk and Malton (Kevin Hollinrake) mentioned the issues with the section 166 report and what was initially published. He made an important point, and I echo his sentiments. For hon. Members who have not read the report, it makes for devastating reading and is worth looking at.

The reality is that the redress scheme is not good enough. For a start, it does not have enough money to compensate victims adequately for what has happened to them. RBS will never be able to afford to fund all the claims being made by small or medium-sized businesses. As the redress scheme is run by the bank itself, it is fairly easy for the bank just to pay out to the victims, where the bank now has majority ownership and is therefore one of the main creditors. If there is not adequate external scrutiny, such situations can arise without check.

GRG was in the wrong. Everybody in this House agrees that GRG was in the wrong. RBS agrees that GRG is in the wrong, which is why it has a redress scheme. It is clear that the time for talking has passed. All of us standing around here are clear that something needs to be done. This issue has united the House, which does not happen very often. It is in the power of the Government to take actual action and to create a real system with proper redress.

[Joanna Cherry]

Does my hon. Friend agree that the Minister needs to give us some tangible gains to take away to our constituents—including my constituents Mr and Mrs Neave—as a result of today’s debate. We have been going around the houses for years now, as the hon. Member for Brentwood and Ongar (Alex Burghart) said.

[Kirsty Blackman]

I absolutely agree. The time for talking about this is over. It is time for the Government to take action. It is time for action to ensure that all our constituents can claim the redress that they should and that all business practices that devastated people’s lives are properly brought to light.

--- Later in debate ---

[John Glen]

I am grateful for that intervention. I am happy to clarify that the letter has been copied to the chair of the APPG and the Chair of the Select Committee, and I will make it more widely available.

There are already a number of avenues for SMEs seeking a resolution when dealing with their bank. Our smallest businesses have the Financial Ombudsman Service. I am of course aware of the “Dispatches” programme, and I have met the chief executive. The FOS is reviewing its operations and addressing the matters raised.

Where there are widespread issues, the FCA can ensure, and has ensured, redress through industry-wide or firm-specific redress schemes. Of course, there is also the usual legal process open to business, although I know this can be a time-consuming and costly process.

Since the last debate, the FCA has published a consultation paper on expanding the remit of the Financial Ombudsman Service, which would widen eligibility to include a greater range of SMEs.

[Joanna Cherry]

On the point about legal redress, does the Minister not appreciate that a lot of our constituents have lost everything. If they are in Scotland, they might be lucky enough to still be eligible for legal aid, but many legal aid lawyers are not equipped to take on this sort of complex action, so this is a real David and Goliath situation. That is why we need the tribunal.

[John Glen]

I acknowledge the outstanding concerns of many people across the United Kingdom, and that is why I welcome the FCA’s consultation. It is my belief that widening SME access to the FOS is the right thing to do.