Banking Misconduct and the FCA

Norman Lamb Excerpts

Thursday 10th May 2018 Commons Chamber

[Martin Whitfield]

I am grateful for the right hon. Gentleman’s intervention. I am just moving on to talk about the fact that although there are very legitimate objectives at the turnaround units that many banks have operated, they are so easily manipulated to carry out systematic asset stripping of small and medium- sized enterprises. Indeed, it is the surveyors, insolvency practitioners, turnaround consultants, Law of Property Act receivers, lawyers and accountants that support financial institutions and enable and facilitate the systematic abuse that was so clearly laid bare in the section 166 report who must also be held to account for these failings.

[Norman Lamb (North Norfolk) (LD)]

The hon. Gentleman mentioned the section 166 report. I understand that the second phase has now been brought in-house into the Financial Conduct Authority. Promontory has ended its role. There is a concern on the part of many people that there will be a lack of transparency. There is a concern about a further possible cover-up of really serious wrongdoing.

[Martin Whitfield]

Again, I am really grateful for that insightful interjection. There clearly is a concern about transparency. Beyond the single events—tragic as many of these are—the overall story and picture that people are taking away about our banking industry is its being heavily influenced by hidden-door decisions, by delayed reports and by people, frankly, trying to protect themselves rather than shining a light on what has been happening to try to make the system better for the future.

Here we are again, talking about past misconduct. However, this is the catch, and it was mentioned early on: for business owners across the country who have lost their livelihoods, their homes, their marriages and, quite often, their health, this is not an issue of past misconduct; it greets them every single day when they wake up and haunts them at night when they go to sleep.

The impact of this scandal has been so profoundly damaging that people have taken the appalling decision to end their lives because they cannot face things any more. It is the responsibility of this House and of the financial services—it is genuinely the responsibility of everyone—to ensure that there are answers to these questions so that, hopefully, and at last, some people and some families can find some peace.

--- Later in debate ---

[Norman Lamb (North Norfolk) (LD)]

It is a pleasure to follow the hon. Member for Dumfries and Galloway (Mr Jack) and I agree with every word he said. I congratulate the hon. Member for East Lothian (Martin Whitfield) on securing the debate and I thank the Backbench Business Committee for granting it.

The case for both an independent tribunal and a full public inquiry is overwhelming: the destruction of businesses, the destruction of lives, the ruin it has caused for families and the appalling treatment of whistleblowers. Brave people chose to speak out, risking everything. My constituent Mark Wright has seen his career and his health destroyed. He is a brave man still left waiting. What I would say to the Minister is this: this issue unites the House. There is complete agreement on both sides of the House on the need for something to happen. We have been debating this matter for quite some time and I do not really feel any sense of progress being made. I am afraid to say that I have lost confidence in the FCA’s ability to get to the bottom of the extreme wrongdoing that we have witnessed across our banking sector. This issue causes so much anger among people across our country. There is a sense that the elite got away with it without any consequences. I therefore say to the Minister: take seriously the sentiment on both sides of the House and call a public inquiry without further delay.

I want to raise an additional issue, which has the potential for further scandal: the risk that victims of the shareholder action against RBS and victims of GRG could face further loss as a result of the behaviour claims management companies and the failure of regulation and the policing of those regulations by the Ministry of Justice. The regulations were brought in by the Compensation Act 2006. Any claims management company that operates as a business needs to be regulated, yet the claims management company that worked on the shareholders’ action has never been regulated at all. This has been brought into sharp focus because of the action in that case. There has been a settlement of £200 million, but victims are still waiting for most of the money to be distributed. There are concerns about a £20 million bill from a firm called Evaluesafety linked to a certain Gerard Walsh, who has been involved from the very start. He has a track record of personal and business insolvency and has faced allegations of fraud, yet when concerns are raised with the MOJ it seems satisfied by assurances given by a lawyer associated with Gerard Walsh that everything is fine and that regulation is not relevant in this case. However, lawyers have advised the action group company that it comes within the regulatory remit and yet the MOJ does nothing.

I am really concerned about a double jeopardy here: people who have already lost through the appalling behaviour of RBS are now at risk of losing again with the settlement money leaking out all over the place, potentially improperly, and the victims left still waiting. The Ministry of Justice is doing nothing to get to grips with this. These are Government regulations passed through this House. The MOJ—I urge the Minister to have words with his ministerial colleagues—needs to get a grip. There are criminal sanctions where there is a failure to properly register in the regulation system. These people, if they are taking money out of the settlement pot away from innocent victims, need to be pursued. I do not know what the solution is and I do not know the full facts of the case, but I absolutely know that it needs to be investigated as a matter of urgency.

This is a long-running scandal. So many people have lost out so badly that we will only restore confidence in the banking system and in the system of regulation if we have a full public inquiry. The Government need to order it now.