Banks: Forged Customer Signatures

Lord Sharpe of Epsom Excerpts

Monday 16th January 2023 Lords Chamber

[Lord Sikka]

To ask His Majesty’s Government, further to the reply by Lord Sharpe of Epsom on 30 June 2022 (HL Deb cols 755–6) relating to allegations of banks forging customer signatures, what steps they have taken (1) to investigate and to prosecute banks for forging customer signatures, and (2) to compensate the victims.

[The Parliamentary Under-Secretary of State, Home Office (Lord Sharpe of Epsom) (Con)]

My Lords, the National Economic Crime Centre has concluded its assessment into the materials submitted to it in relation to allegations of signatory fraud by banks and will communicate its findings to relevant parties imminently.

[Lord Sikka (Lab)]

I note that the Minister has not given any definite date for that. As usual, the Government are soft on corporate crime in the City, and thousands of innocent people have lost their homes, jobs, pensions and savings. Is it not time that we had a public inquiry into the Government’s support for the City in these crimes?

[Lord Sharpe of Epsom (Con)]

The noble Lord makes a number of fairly grave and unfounded allegations. The relevant experts in the NECC have been assessing the extensive material provided; he knows how extensive it was. The NECC has extended its review as new material has been supplied, but, recognising the complexity of fraud cases, I hope that all noble Lords will understand the length of time that this has taken. As I say, the NECC is in the process of notifying the complainants at the moment.

[Baroness Kramer (LD)]

My Lords, does the Minister recognise that both the regulators and the enforcement agencies are seriously underresourced in tackling wrongdoing in the financial services sector? Will he support our proposals to distribute the fines from financial services-related prosecutions to the regulators and agencies in order to beef up their capacity?

--- Later in debate ---

[Lord Sharpe of Epsom (Con)]

My Lords, no, I do not accept that the enforcement organisations and the regulator are underresourced with regard to these matters. The Government are increasing law enforcement investigative capacity to tackle fraud. The 2021 spending review allocated a further £400 million to tackle economic crime, including another £100 million for fraud, which includes greater fraud investigative capacity in the NCA. There are a number of other sources of funding and government efforts and initiatives on this subject that I could go into, but the answer would be a long one.

[Baroness Blower (Lab)]

My Lords, rather than an independent investigation of fraud at HBOS, the Government have passed the buck to HBOS’s parent company, Lloyds Banking Group, to investigate. In April 2017, Lloyds appointed Dame Linda Dobbs to conduct a review, and a report was promised within a year. Nearly six years later, there is no report and no compensation for victims. Is the Minister satisfied, or is he rather ashamed? What prevents that inquiry being launched?

[Lord Sharpe of Epsom (Con)]

My Lords, the Minister is neither satisfied nor ashamed. I do not know the circumstances of that particular case. I am unable to comment on individual cases, but I will make further inquiries.

[Lord Woodley (Lab)]

My Lords, I struggle to read these facts out; they are quite unbelievable. As the Minister is well aware, the Lloyds Banking Group is accused of forging customers’ signatures. Since 2010, it has paid fines of £468 million, on 42 separate occasions. Yet it is allowed to fund the City of London Police—the very people who investigate banking and financial fraud. Can the Minister explain why the Government permit crooked banks to fund the police and how the resulting conflicts of interest are managed?

[Lord Sharpe of Epsom (Con)]

My Lords, those are yet more grave allegations that are partially unfounded. I have said already that this Government are doing a great deal with regard to funding the police and making changes to the way in which fraud is dealt with and investigated. We all recognise that this is a very serious crime; it needs to be dealt with.

[Lord Anderson of Swansea (Lab)]

My Lords, will those parts of the review that are partially well founded be made public? They are serious and of major public interest.

[Lord Sharpe of Epsom (Con)]

As I have just said, I am afraid that I am unable to comment on individual cases. I do not know the circumstances of this particular case, but I will find out more.

[Lord Coaker (Lab)]

My Lords, these victims of fraud by banks have been waiting nearly four years, following the initial statement from the Minister and others that they would look into this issue. One can only say that, if the banks were the victims of fraud, they would act a lot more quickly than they do when it comes to acting on behalf of their customers who are alleged to be the victims of fraud. I think what they want to hear from the Minister is what “imminently” means? Does it mean next week? Does it mean next month? Does it mean next year? These victims have been waiting too long for justice. It is about time the Government told the banks to get a move on.

[Lord Sharpe of Epsom (Con)]

My Lords, it is not the banks which need to get a move on. As I said earlier, the decision has been communicated to some of the complainants, but the Treasury Select Committee, certain remaining complainants and other relevant parties are not yet aware of the outcome. We should expect all necessary persons to be notified in the appropriate manner; beyond that, it would be unwise of me to comment on operational matters.

[Lord Howell of Guildford (Con)]

My Lords, stronger regulation means taking stronger powers to the Executive, which means a stronger and bigger stream of statutory instruments and secondary legislation coming through this House. Will my noble friend encourage his colleagues in the Government to support moves by Parliament to get stronger resources and have the capacity to scrutinise and control this stream of legislation?

[Lord Sharpe of Epsom (Con)]

My Lords, my noble friend makes a very sensible point. However, fraud falls within the Financial Conduct Authority’s objective of reducing the risk of financial crime, which impacts its consumer protection objectives. Obviously, the FCA will not hesitate to take the appropriate action against firms which do not meet its standards.

[Baroness Bowles of Berkhamsted (LD)]

My Lords, since the Minister has just raised the Financial Conduct Authority, should it not have a clear objective to prevent fraud, rather than it just being under consumers? Much of this fraud has been perpetrated against small and medium-sized businesses, which are not covered by the consumer protections.

[Lord Sharpe of Epsom (Con)]

The noble Baroness makes an interesting point, which I will happily take back to those who are responsible for overlooking and overseeing the FCA.

[Lord Watts (Lab)]

My Lords, is it not the case that all our regulators are toothless tigers? What is needed is more resources and a change in legislation to give the powers to protect the public.

[Lord Sharpe of Epsom (Con)]

My Lords, I do not believe that they are toothless tigers. As I have said a number of times regarding capacity and resources, a great deal is being done. There will be significant improvement to the National Economic Crime Victim Care Unit over the course of this year, and I would be happy to answer more questions on that.

[Lord Greenhalgh (Con)]

My Lords, does my noble friend the Minister recognise that it is not the banks that we should be aiming at but the fraudsters themselves. The City of London Police, the Metropolitan Police and the National Crime Agency do a fantastic job. However, in some ways, Action Fraud should be renamed “No Further Action Fraud”, because we need more resources. This crime is getting greater. Let us not turn our fire on the banks but go after the fraudsters.

[Lord Sharpe of Epsom (Con)]

I completely agree with my noble friend that we should look at the fraudsters. Regarding Action Fraud, we are providing £10 million to the City of London Police this year to support the upgrade in the Action Fraud service. A project is under way to transform the Action Fraud website, where the public can report fraud and cybercrime. That is part of the continuous improvements to the national service, which will be fully upgraded by 2024.

[Lord Hunt of Kings Heath (Lab)]

My Lords, why are the Government taking so long to produce the promised national fraud strategy? Also, why is less than 1% of police activity concentrated on dealing with financial fraud?

[Lord Sharpe of Epsom (Con)]

Regarding the national strategy, the noble Lord makes a very good point. I committed at the Dispatch Box that it would be out before the end of last year. However, I can confirm that it is being discussed cross-departmentally and is imminent. If noble Lords are interested, I am happy to set up a briefing so that we can discuss it in greater detail as soon as it is published.

[Lord Hendy (Lab)]

My Lords, the Minister says that the reason for the delay is that fraud is complex. It is, but why is banks forging the signatures of their customers complicated?

[Lord Sharpe of Epsom (Con)]

My Lords, I have not seen the 10,000 pages of evidence in the 26 lever arch files, but expert investigators have, and it is their opinions that we are waiting for.