RBS Global Restructuring Group and SMEs

Norman Lamb Excerpts

Thursday 18th January 2018 Commons Chamber

[Norman Lamb (North Norfolk) (LD)]

The testimony we just heard from the hon. Member for Dumfries and Galloway (Mr Jack) was incredibly powerful and valuable.

I speak as a co-sponsor of the debate, and I agree with every word of the opening statement by the hon. Member for Norwich South (Clive Lewis). The revelations in the report of the independent review are absolutely shocking, and that is without the revelation from my right hon. Friend the Member for Twickenham (Sir Vince Cable) that the full report says

“Management knew or should have known that this was an intended and co-ordinated strategy”.

Why was that left out of the report’s summary? It potentially makes the FCA complicit in the cover-up, which is incredibly serious and needs to be considered.

Even without that, the report of the independent review highlights systematic failures, which in itself is an incredibly important conclusion. There was a failure to fully recognise and manage the conflict of interest between GRG’s twin objectives of turning around businesses and making a financial contribution to RBS. The review concludes that the commercial objective had been the strategic focus of management. That prompts the question: was GRG just incredibly stupid, or did it know exactly what it was doing? If it did know what it was doing, it amounts to theft of assets from people who, in many cases, were running entirely viable businesses—the hon. Member for Hazel Grove (Mr Wragg) described it as asset stripping. These were people who had grafted throughout their adult lives to build up their businesses, which were destroyed by this outrageous behaviour. It is an extraordinary scandal.

The catalogue of unacceptable behaviour outlined in the review and exposed by brave whistleblowers demonstrates an absolutely rotten culture: victory emails celebrated taking assets off businesses; there were incentives for staff to take more money off stressed businesses to boost their bonuses; and what of the role of lawyers in managing the conflict of interest, or of the accountants, or of the auditors? Who was complicit in this scandal? That is why the hon. Member for Norwich South said we need an inquiry to find out who is culpable.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

The right hon. Gentleman is making a powerful speech. He mentions the relationship between the FCA and RBS. Is he aware of the leaked minute from an FCA board meeting that says that one of the reasons why the FCA will not release the full report is that it is concerned about being sued by RBS? Does that not raise the question of who is regulating whom in this relationship?

[Norman Lamb]

The hon. Gentleman is entirely right. We rely on the regulator to be powerful and tough in such situations.

The human cost is incalculable. People have been driven to suicide and marriages and health have been destroyed, but who has been held to account for this disgusting behaviour? People and businesses ruined must have justice. I say to the Minister that an independent tribunal is essential. It would act as a deterrent to bad behaviour; banks would know their actions have consequences if they knew it would go to an independent tribunal.

My constituent Mark Wright is an RBS whistleblower. His career and his health have been destroyed. He and others are the heroes of this sorry story, risking everything to do the right thing, yet he has also been horribly let down by the regulator. The FCA, including its chief executive, Andrew Bailey, dismissed his concerns, but this week he won a vital victory when the complaints commissioner ruled that the FCA was wrong to reveal his name to RBS. What cavalier disregard of a whistleblower’s rights! The FCA fought the complaint all the way, only apologising right at the end. The case was brilliantly pursued by Steve Middleton, who deserves enormous credit. He is now setting up, with others, Bank Confidential—I declare an interest in that I am a patron—to protect whistleblowers and expose wrongdoing.

The truth is that whistleblowers have no real protection in this country. Contrast that with the situation in the United States, where the Dodd-Frank legislation introduced the Office of the Whistleblower, which is there to protect whistleblowers. Whistleblowers are rewarded financially for doing the right thing—they are awarded between 10% and 30% of the sanction collected against the firm, which can run into millions of dollars. What a contrast with the position in this country! We need our own office of the whistleblower, and whistleblowers should be guaranteed anonymity; they should be rewarded for their bravery. Maintaining the integrity of the banking system is of fundamental importance to us all, and whistleblowers are necessary for that purpose.

My fear is that in the aftermath of the crash in 2008, all the focus of the banks, the regulator and Government was on rebuilding balance sheets, and a collective blind eye was turned to how that was achieved and how many victims were left along the way—business owners and whistleblowers. The Government and the FCA now need to act to clear up this scandal and to get new arrangements in place to rebuild trust in British banking and give justice to those ruined by this outrageous behaviour.

--- Later in debate ---

[John Glen]

I thank my hon. Friend for his kind words. Of course we need to reach a stage where we have some answers. We need to know what went wrong, and we need to secure an outcome that is acceptable to our constituents.

It is important to recognise the fundamental need for financial providers to act in accordance with the rules of the FCA and the spirit of its principles. When they do not act in accordance with those principles, we need to have confidence in the mechanisms that exist to resolve disputes.

[Norman Lamb]

The Minister has not yet mentioned the role of whistleblowers. Does he agree that they are vital to maintaining the integrity of the financial system, that they need proper protection—an office of the whistleblower—and that they should be rewarded for being brave enough to reveal wrongdoing?

[John Glen]

I listened very carefully to the right hon. Gentleman’s remarks and he is absolutely right. We need a change to the culture to enable wrongdoing to be exposed and dealt with, and I will look very carefully at this matter and the principles in his suggestions.

I am very aware of the allegations and the powerful testimony made against RB. I have taken on board the discussions we have had today, and later I will refer to some of the other substantive points raised across the House, but I want to be clear with Members: I saw the front page of City A.M. today, whose headline is “Go Hang”, and I do not condone the language in the GRG letter that RBS itself chose to release yesterday. I assure the House that the Government take these issues and any allegations of malpractice very seriously.