Banking Sector Failures

Debate between Kevin Hollinrake and Peter Bone

Thursday 12th July 2018 Westminster Hall

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

It is a pleasure to serve under your chairmanship, Mr Bone. I thank my hon. Friend the Member for Beckenham (Bob Stewart) for his kind words. Although it is nice to have a report with my name on the front, it was written with co-operation and contributions from many people in the all-party group and outside it. It is wonderful to be associated with such an effective group, which has been one of the key bodies responsible for today’s debate. We would not be here without the all-party group. I have been associated with it for only a few short months, so I pay tribute to the many people who came before me. I thank the hon. Member for East Lothian (Martin Whitfield) and my hon. Friend the Member for Stirling (Stephen Kerr) for sponsoring today’s debate and for their superb contributions, which set out clearly the banking failures and abuses.

I have been lucky to have had the opportunity to start and build a business over 25 years, starting from small beginnings and building it into a large national organisation. I could not have done that without the support of banks, who in the main provide a good, vital service to businesspeople across the UK.

Businesses will often try to bend or break the rules—it is part of the entrepreneur’s DNA. Sometimes that can have a positive effect: creative destruction that finds new, more effective and cheaper ways of doing things that benefit consumers. Rule breakers such as Uber and Amazon present constant challenges to rule makers as regulations have to play catch-up to deal with new and better ways of working. However, sometimes breaking the rules can be very bad, particularly when they are broken so badly and with such immorality by those within an effective UK banking oligopoly of banks that are too big to fail, too big to sue and apparently too big to regulate.

In the last 10 years, particularly at Lloyds-HBOS and RBS, we have witnessed the most disgraceful, shameful episode in British banking’s 500-year history. Despite persistent and strenuous denials, those banks broke the rules to such an extent that they have been found guilty respectively of fraud and systematic mistreatment of their own business customers, which has led to the destruction of thousands of jobs, businesses and lives. In business, business is one’s life—it is not just about money. Those banks not only denied wrongdoing but used all the money, influence and power at their disposal to shut down and discredit anyone who tried to draw attention to their malpractice.

In 2013, Yorkshire businessman Lawrence Tomlinson, then the entrepreneur in residence at the Department for Business, Innovation and Skills, was the first to discover and report on the abuses of thousands of SMEs at RBS and its notorious restructuring division, GRG. Incredibly, its response to his report was to withdraw banking facilities to his extensive business empire—he was an RBS customer—putting thousands of jobs at his enterprises at risk. It even tried to convince its Coutts subsidiary to withdraw the mortgage on his home.

It is individuals such as Mr Tomlinson, Paul and Nikki Turner—they are in the Public Gallery—and my constituents, the Welsbys, as well as journalists and those involved in the all-party group, who have brought abuses to light, not our regulator. Why should it be down to individuals to hold these people to account? We are also grateful to some eminent people in the legal world, including the former Master of the Rolls, Lord Dyson, and barristers Richard Samuel and Jeff Golden, for their support in drafting the report, which gives it so much credibility.

Two months after the Tomlinson review, the banking regulator, the Financial Conduct Authority, commissioned a full “skilled persons” report, which was completed in September 2016. It decided not to publish the report, at least in part—according to leaked minutes of the board meeting—because of concerns that it might be taken to court by RBS. Instead, 12 months later, it published a summary of the report, which inexplicably reversed the principal emphasis from demonstrating “widespread inappropriate treatment” to

“isolated examples of poor practice.”

How can that be?

Power corrupts, and absolute power corrupts absolutely. With 90% of our business lending under the control of our big four banks, it is vital that our regulators hold this oligarchy to account. Yet, despite the banks’ chequered history of deception and denial, they are still allowed by the FCA to carry out their own internal compensation schemes and inquiries. There is little sign of action from the regulators or our fraud or crime agencies. Our regulators should be fearless protectors of banking customers and consumers, but actually they appear to be defenders of the banking faithful.

There was an interesting conversation at our launch last night. One of our officers spoke to one of the senior executives at Lloyds about our work—we are determined to call a spade a spade—who said, “Well, our good will towards you is wearing a little thin.” Our regulators, our Members of Parliament and our Ministers do not require Lloyds-HBOS’s good will to hold it to account.

The “Project Lord Turnbull” report, which the APPG published recently, makes serious allegations of fraud and cover-up against senior directors of Lloyds and HBOS. Those allegations must be investigated. I will name those people again: Andy Hornby, the chief executive; Sir Dennis Stevenson, the former chairman; James Crosby; Peter Cummings; Sir Ron Garrick; Mike Ellis; Peter Hickman; Hugh McMillan; Stewart Livingston; Ian Goodchild; Steven Clark; Andrew Scott and Tom Angus.

Those people must be questioned and investigated, as must those connected with those crimes, such as Rory McAlpine, the solicitor for the board of HBOS and then for the board of Lloyds Banking Group, who was repeatedly sent evidence of the fraud by Paul and Nikki Turner, and even confirmed to the Turners in writing that if their allegations were confirmed, that would amount to criminal conduct. He attended, I believe, six of the Turners’ 22 eviction hearings in the Cambridge county court—an odd venue, one might think, for the deputy chairman of one of the UK’s largest law firms. His comments in the Turnbull report show a surprising level of antagonism toward the Turners and also, potentially, a surprising disregard for the law.

There are also individuals such as David Crawshaw of KPMG, who was the reliable insolvency practitioner to Lynden Scourfield, one of the people found guilty of the HBOS fraud. These people must be investigated—

[Mr Peter Bone (in the Chair)]

Order. I am sorry to interrupt the hon. Member when he is speaking, but I want to be assured that none of the cases he is discussing is live. They are not sub judice, are they?