RBS Global Restructuring Group and SMEs

Kevin Hollinrake Excerpts

Thursday 18th January 2018 Commons Chamber

[Kevin Hollinrake (Thirsk and Malton) (Con)]

The right hon. Gentleman is making a powerful speech. He mentions the relationship between the FCA and RBS. Is he aware of the leaked minute from an FCA board meeting that says that one of the reasons why the FCA will not release the full report is that it is concerned about being sued by RBS? Does that not raise the question of who is regulating whom in this relationship?

[Norman Lamb]

The hon. Gentleman is entirely right. We rely on the regulator to be powerful and tough in such situations.

The human cost is incalculable. People have been driven to suicide and marriages and health have been destroyed, but who has been held to account for this disgusting behaviour? People and businesses ruined must have justice. I say to the Minister that an independent tribunal is essential. It would act as a deterrent to bad behaviour; banks would know their actions have consequences if they knew it would go to an independent tribunal.

My constituent Mark Wright is an RBS whistleblower. His career and his health have been destroyed. He and others are the heroes of this sorry story, risking everything to do the right thing, yet he has also been horribly let down by the regulator. The FCA, including its chief executive, Andrew Bailey, dismissed his concerns, but this week he won a vital victory when the complaints commissioner ruled that the FCA was wrong to reveal his name to RBS. What cavalier disregard of a whistleblower’s rights! The FCA fought the complaint all the way, only apologising right at the end. The case was brilliantly pursued by Steve Middleton, who deserves enormous credit. He is now setting up, with others, Bank Confidential—I declare an interest in that I am a patron—to protect whistleblowers and expose wrongdoing.

The truth is that whistleblowers have no real protection in this country. Contrast that with the situation in the United States, where the Dodd-Frank legislation introduced the Office of the Whistleblower, which is there to protect whistleblowers. Whistleblowers are rewarded financially for doing the right thing—they are awarded between 10% and 30% of the sanction collected against the firm, which can run into millions of dollars. What a contrast with the position in this country! We need our own office of the whistleblower, and whistleblowers should be guaranteed anonymity; they should be rewarded for their bravery. Maintaining the integrity of the banking system is of fundamental importance to us all, and whistleblowers are necessary for that purpose.

My fear is that in the aftermath of the crash in 2008, all the focus of the banks, the regulator and Government was on rebuilding balance sheets, and a collective blind eye was turned to how that was achieved and how many victims were left along the way—business owners and whistleblowers. The Government and the FCA now need to act to clear up this scandal and to get new arrangements in place to rebuild trust in British banking and give justice to those ruined by this outrageous behaviour.

--- Later in debate ---

[Kevin Hollinrake (Thirsk and Malton) (Con)]

First, I must draw the attention of the House to my entry in the Register of Members’ Financial Interests. I have been in business for 25 years and still am today, and our business was once a customer of RBS. Thankfully, we did not suffer from any of the tragic circumstances that many Members have talked about today.

I thank my co-officer on the all-party group on fair business banking, the hon. Member for Norwich South (Clive Lewis), for clearly setting out the case for a tribunal, to which I need to add very little detail. I will, however, make some further points. There is not only a case for justice here, but an economic imperative. We know that the powerhouse behind our economy is SMEs. Some 99% of all businesses are SMEs. They employ 60% of our private sector workforce and create 51% of its turnover, yet they have suffered terribly from these colossal injustices. There is now a crisis of confidence between our businesses and our banks. The Treasury is doing great work in trying to find funds for new companies and scale-ups that cannot borrow, but what about those companies that will not borrow because they just do not have the confidence to do so? Many people in the Public Gallery can provide great evidence to show that, in their minds and the minds of many other business people, that is absolutely the case.

This is about not just RBS, but many other banks, such as HBOS and Lloyds. We are talking about tens of thousands of businesses, but that statistic masks individual tragic stories. These are people’s lives and their life’s work. My constituents John and Kerry Welsby had a good business. They were persuaded to take on a loan that the bank salesman did not understand, and that they could not understand, but in the pressure of business, sometimes people take on such loans. They signed up to the loan but, as interest rates fell, the cost went from £6,000 a month to £17,000 a month. That broke the business. The bank then decided that it would compensate them for the cost of the loan—a few hundred thousand pounds, which is an awful lot of money—but what about the cost of the business that was broken? That was their life’s work—tens of millions of pounds. It is an outrageous injustice.

The difficulty, as we all know, is not only that banks are too big to fail, but that they are too big and too wealthy to sue. No form of justice is available in this situation. I do not believe that the Financial Ombudsman Service could deliver the solutions we need. We need to look at other solutions to provide justice. Our all-party group is considering the idea of a tribunal and we need to ensure that we get that justice. In a tribunal, the plaintiff will not have to carry the costs of the defence if they lose, so it represents an accessible form of justice. We believe that that could be delivered through secondary legislation, but obviously we need to look into that.

The all-party group accepts that we need to do proper research. One thing we absolutely cannot countenance, and that even businesses that have been wronged in this process will not countenance, is to stem the flow of lending. We cannot afford to do that, so we must take the time to conduct research. We are prepared, as an all-party group, to do that. We have support from some surprising places—participants in the financial services industry. We just need time for the Treasury to work with us to ensure that we deliver the right solutions for justice and to benefit small businesses and the UK economy.