Commercial Financial Dispute Resolution Platform

Mark Williams Excerpts

Thursday 15th December 2016 Commons Chamber

[Mr Mark Williams (Ceredigion) (LD)]

It is a privilege to be able to speak to this motion. First, may I congratulate the hon. Member for East Lothian (George Kerevan) not only on initiating this debate on our behalf, but on his leadership of the all-party group for fair business banking, of which I am a vice-chair? I also wish to pay tribute to the former chair of the group, the hon. Member for Aberconwy (Guto Bebb), who helped us to set up the “bully banks” all-party group, as it was then, some years ago. Let me read out what he said when we debated these things earlier this year. He said that the FCA

“must work with integrity and be independent to deliver in the interests of a healthy financial marketplace.”—[Official Report, 1 February 2016; Vol. 605, c. 715.]

The sad reality for many of my constituents, in a constituency targeted for the selling of interest rate swaps—adverts were taken out in the local newspaper, and at one point we had more than 20 cases of mis-selling of hidden and embedded interest rate swap products—is that they lack confidence in the FCA, based on their experience; the respect and confidence that they should have have dissipated.

As we have heard, the ad-hoc scheme set up by the FCA for interest rate hedging product mis-selling has never had the authority or impartiality that it should have as a model for redress, as was acknowledged by Andrew Bailey in a very welcome admission before the Treasury Committee. The fact that he acknowledges this problem indicates—we hope—that he understands there needs to be reform, and we have heard positive comments from my hon. Friend the Member for East Lothian—he is my hon. Friend for these purposes—and from the hon. Member for Henley (John Howell).

The ad-hoc scheme was fundamentally flawed, not just because it was bank-centric and the FCA oversight was not rigorous enough, but because those SMEs that had embedded or hidden swaps were excluded from it. As has been said many times in this place, when the impact of an embedded swap is the same as the impact of a separate hedging product taken out with a loan, it is difficult to argue that the small businesses that were sold those products should be excluded from the scheme—but they were excluded from the scheme and they were denied justice.

Business and commercial banking is an unregulated activity in the UK, and those of us who have been following these matters know that businesses do not have the same level of protection as consumers do. That point was made by the right hon. Member for Delyn (Mr Hanson). Nor do they have recourse to a timely dispute resolution mechanism—the key word there is “timely”. As we have also heard, banks have deep pockets and recourse to civil litigation is unaffordable for most SMEs—certainly those I represent. Ceredigion has more small businesses per head of population than anywhere else in the UK. Those businesses and those people do not have those kinds of resources, so what do they do? First, when a business has a complaint against its bank, it has to rely on its lender’s internal complaints procedure. Time and time again, I have seen constituents deliberately hung out to dry by their banks, pushed into the long grass, in the hope that the issue would disappear or the constituents would give up. In all too many of those cases, businesses went under as a consequence of that prevarication.

Today, I want to raise the case of my constituent Mansel Beechey, a well-known publican in Aberystwyth and a customer of the Clydesdale bank, whose case regarding the mis-sale of an unregulated interest rate hedging product I have mentioned many times. We have had four or five of these debates over the past four years, and I have had to mention Mr Beechey’s case in every one, yet it remains unresolved. Mansel first formally complained to the Clydesdale bank in April 2012 through his solicitor and it took the bank six months to respond, which is clearly unacceptable. I wish to endorse the comment made by a Scottish National party Member about businesses that have been too frightened to pursue matters for fear of action being taken against them.

If an internal complaint fails—Mr Beechey had no confidence in the internal complaints mechanism—some SMEs can go to the Financial Ombudsman Service. Although the FOS is keen to explain that it will look at the facts, I am sad to say that I believe it has been selective in what it has looked at and has all too often examined evidence in isolation. I am sure it has done well in many disputes, such as those relating to payment protection insurance and payday lending, but my experience of the past four years has shown me that it has not had the expertise to deal with acutely complex cases.

For example, the ombudsman suggested that monthly payments under the redress scheme for my constituent would have been about £1,000 more than the actual fixed rate loan interest, which Mr Beechey says he could not afford. Yet the ombudsman insists that there was not a great difference between these payments, and his whole judgment hinges on this belief, which seems extraordinary. I am not a businessman—perhaps that is a good thing—but even I can grasp the fact that Mr Beechey’s pub business would need to take around eight times the amount of £1,000 through its till, which is about £ 96,000 per year or a third of the annual turnover of the pub. We need reassurance that those at the FOS are suitably qualified and experienced to understand how small businesses work.

Several constituents have cited timeliness as a problem with the FOS, which, sadly, seems to move at glacial speed. Some cases presented several years ago remain unresolved. What is very concerning is that when a final decision has eventually been reached in a case, it will never be overruled, even when that decision may be brought into question by new evidence or a change of approach in other comparable cases.

Another example to cite is the case of Mr Geraint Thomas of Bargoed farm in Llwyncelyn, a Lloyds bank customer of 53 years who was mis-sold a fixed-rate loan during the banking crisis. Mr Thomas was severely let down, with little understanding shown by his relationship manager at the bank of his financial situation, putting him and his business under great pressure. This started a long-standing complaint, which has required my intervention on several occasions, including phone calls to Lloyds officials. Eventually, a revised settlement offer was given by Lloyds, which Mr Thomas was under immense pressure to sign or he would lose out on it entirely; this came with the understanding that he would still be able to take his concerns to the FOS. However, since this period, the FOS has refused point-blank to look at the case, on the basis of the settlement he agreed with Lloyds bank, despite the fact that I had previously received assurance directly from Lloyds that his acceptance of the offer would not stand in the way of his complaint being taken to the FOS. It seems to have done exactly that.

We have heard about issues relating to subject access requests, a topic touched on a moment or two ago. Andy Keats of the Serious Banking Complaints Bureau has said:

“The bank relies on concealment of your central file, committee meeting reports and minutes, internal and external valuation of your property, loan documents and bank rules, etc.”

That is hardly a system of transparency to inspire confidence in the system. In the course of working for Mansel Beechey, we have made three subject access requests to both the Clydesdale bank and the FOS. He found that in simultaneous requests to both organisations, new information kept on coming. I have seen different transcripts of telephone conversations, three different credit reports and three different sets of credit figures. Things seem to have been changed by the stroke of a pen. Again, that is not a way to inspire my constituents’ confidence, and I seriously question the level of transparency and disclosure in his case and, no doubt, in others.

I could go on at length, Madam Deputy Speaker, but I am not allowed to. I apologise for the detail of some of what I have said, but it shows the practicalities of the cases we have taken on behalf of our constituents. Let me just end by making a plea for a level playing field. The system, whether we call it ad hoc or something else, seems to have been stacked firmly in favour of the banks. Our constituents—the small businesses of Ceredigion and elsewhere—deserve a fair chance. That is why I hope that some of the suggestions made by the all-party group will be taken forward, in the weeks and months—not years—ahead.

[Several hon. Members rose—]