Banking Misconduct and the FCA

Debate between Martin Whitfield and Layla Moran

Thursday 10th May 2018 Commons Chamber

[Martin Whitfield (East Lothian) (Lab)]

I beg to move,

That this House welcomes the public disclosure of the Section 166 report into the conduct of RBS Global Restructuring Group (GRG); is concerned about the fundamental difference of tone and emphasis between the summary produced by the Financial Conduct Authority (FCA) and the full report; believes this calls into question the strength and independence of the regulator; notes that the concerns raised in the debate on 18 January with regard to the financial services sector, which is not limited to RBS and its advisors, not only persist, but are amplified by the conclusions in the report; calls on HM Treasury to instruct the FCA to move on to phase 2 of the investigation into the root causes of the conduct of RBS GRG by a body independent to the FCA; and once again calls for an independent inquiry into the financial services sector and the associated industries that have allowed misconduct to thrive, and the establishment of an independent mechanism for redress for businesses.

I would like to start by paying tribute to the Backbench Business Committee for enabling this debate to take place and to the enthusiastic work of the all-party parliamentary group on fair business banking and finance, of which I am vice-chair and which is led by the hon. Member for Thirsk and Malton (Kevin Hollinrake). I would also like to take the opportunity to thank the hon. Members for Stirling (Stephen Kerr), for Edinburgh West (Christine Jardine), for Glasgow South West (Chris Stephens) and for Dumfries and Galloway (Mr Jack), who supported my application for this debate. I also thank those who have travelled down today to listen to the debate live from the Public Gallery.

This debate follows on from the one led by my hon. Friend the Member for Norwich South (Clive Lewis) in January. It demonstrates what an important issue this is for not only our individual constituents but the whole economy. For many, the foundation of the problem is illustrated by bank closures. Indeed, in my constituency, bank closures and the disappointing remission of free-to-use ATM machines are breaking down trust in the banking industry. Ensuring that consumers have access to finance is fundamental to the ethos of community banking.

Today’s debate rightly shifts attention to financial misconduct and considers the section 166 report, but it also stands as a timely reminder to the entire banking sector that the consumer must always be at the centre of its operations. Access to finance is so important to local businesses in East Lothian and across the UK. Whether wronged by commercial lending policies not fit for purpose or hit disproportionality by bank closures, businesses are being badly let down by the industry.

Regarding financial misconduct, a lot has happened since January, and we are not simply here to cover an old story.

[Layla Moran (Oxford West and Abingdon) (LD)]

I am extremely grateful to the hon. Gentleman for giving way. Does he agree that it is not just businesses that suffer? It is also families and people’s mental health. Nigel and Julie Morgan, who are here with us today listening to the debate, have been adversely affected by this issue for years. It is that which we have to bear in mind.

[Martin Whitfield]

I am grateful for the hon. Lady’s intervention. It is right to say that, behind every one of these statistics, there are individuals, families, businesses and employees—who have their own families—who have suffered as a result of all this. I will come on to that in a moment.

The release of the section 166 report into Royal Bank of Scotland’s Global Restructuring Group not only underlined the toxic culture that existed in the GRG but, critically, identified the systemic failures that allowed such conduct to thrive.

Today I intend to focus on three key points. The first is dispute resolution, which has been covered extensively, and the all-party parliamentary group will deliver a report on it in the near future. Secondly, I would like to look at the associated industries involved in this scandal. Thirdly, there is the need for a full public inquiry into the treatment of businesses by financial institutions.

As the debate progresses, I would ask hon. Members to keep at the forefront of their minds the very simple notion of the balance of power and, indeed, the abuse of power, because that is ultimately what we are addressing here, not just with RBS but across the entire ecosystem of commercial lending. We have only to look at the HBOS Reading fraud to understand how corrupt the system can be and how that can thrive if it goes unchecked year after year.