Banking Misconduct and the FCA

Kirsty Blackman Excerpts

Thursday 10th May 2018 Commons Chamber

[Kirsty Blackman (Aberdeen North) (SNP)]

I will not say that it is a pleasure to speak in this debate, because it is not. The stories that we have heard from across the House today are absolutely harrowing. It is clear that each one of us represents constituents who have been affected by what RBS, GRG or one of the other banks have done in the pursuit of profit.

I must declare an interest: my cousin, her husband and their four children were one of the families who were affected by RBS and GRG. In fact, their business was put into the GRG and, as late as 2016, they were made homeless as a result of GRG repossessing the farm in which they lived, so a couple with four children were made homeless by GRG. I felt that it was important that I declared that as an interest.

One of my constituents, who I hope is in the Public Gallery today, has also been to see me in relation to his experiences with GRG. I will not say exactly what GRG did, because that has been widely covered by a number of Members this afternoon. His wife suffered a cardiac arrest as a result of the stress and subsequently died. We have also heard about people committing suicide as a result of what happened with GRG. One Conservative Member—I apologise, but I forget who—talked about the fact that companies jumped through all the hoops they were asked to jump through and yet were still relentlessly pursued for money that they were said to owe because of over-inflated interest rates. This was a relentless pursuit of profit. My constituent who approached me is very clear that there needs to be a public inquiry, and I absolutely agree with him.

This issue has destroyed lives. It is impossible to overestimate how hard it is to be a small business owner anyway. It is difficult to run a small and medium-sized business, particularly if a person has not run one before. It is also a lonely occupation. A person is there trying to run a business by themselves. They may never have done that before, and their bank is supposed to be there to support them; they are supposed to be there to provide them with finance to ensure that they can run a successful business. They are not supposed to pursue people for the assets that they want to gain for themselves.

We have not covered how much of a cabal this situation has involved. The reality is that a very small number of people were running GRG. In fact, some practices that have been raised with me involved these people trying to cover their own backs by encouraging one small business owner to take over the assets of another small business owner at a particularly low price, so that that person’s balance book could look wrong. It is horrendous if those things happened, but they were able to happen because of the very small nature of such organisations and the fact that people were not able to talk about them because they were being told that they were in debt.

[Patrick Grady (Glasgow North) (SNP)]

I, too, have had constituents affected by this, and I agree with many comments made throughout the debate. My hon. Friend is making the case for a public inquiry, otherwise it will fuel suspicions that there is an attempt to continue to keep this matter away from the public eye. She also highlights the fact that we are talking about the Global Restructuring Group. Does she agree that the Minister needs to tell us whether there is international exposure on the activities of the Royal Bank of Scotland—that is, whether these practices were used in some of its overseas activities and whether it is liable for the results of any such behaviour?

[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 ---

[Kirsty Blackman]

Will the Minister commit to, if possible, putting the RBS letter in the Library, so that we can all see it? Will he also ensure that when the FCA does conclude the final part of the report, we can all see the full version as soon as possible?

[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.