Access to Redress Schemes

Debate between Richard Foord and Deidre Brock

Thursday 18th April 2024 Commons Chamber

[Richard Foord]

My right hon. Friend is exactly right. The FCA is not directly accountable to Parliament, but is accountable to Parliament through the Treasury. I, too, have had constituents finding themselves in a David and Goliath scenario, trying to tackle issues of unfairness with the FCA.

Likewise, in finance, we have seen the mis-selling of interest rate hedging products and widespread financial misconduct against small and medium-sized enterprises by the Royal Bank of Scotland, for example. Last year, the all-party parliamentary group on fair business banking conducted the first systematic review of compensation schemes in the UK and found flaws common to several of them. Schemes are frequently blighted by unnecessary complexity, delays and a huge emotional and legal burden on victims. Often schemes are shrouded in secrecy and lack proper independence.

[Deidre Brock (Edinburgh North and Leith) (SNP)]

I am listening to the hon. Gentleman’s speech carefully, and he is making some excellent points. Will he join me in deploring the methods by which organisations avoid their responsibilities to many of our constituents? For example, the business of my constituent George Dosoo, LD Partnership, took on a loan from RBS, now NatWest. In 2012, he discovered that a sum of £150,000 was removed without authority from the partnership account. Despite George obtaining recent legal opinion indicating that his case has merit, NatWest maintains that the case is time-barred and will not reopen it. Does the hon. Gentleman agree that time-barring is another device that is far too often used by businesses and institutions to deliberately undermine our constituents’ ability to obtain recourse?

[Richard Foord]

The hon. Member is right about time-barring. I have a similar case with a constituent of mine, which might chime with hers. Nigel Cairns is trapped in what he describes as a

“complete nightmare scenario, with no way of escape”

after egregious misconduct by a bank. In 2007, Nigel took out a loan of £350,000 from HSBC. He had his house demolished in readiness to rebuild. In preparation for the work, the bank declared the termination and return of the loan. That was in 2007, when the financial crisis was very much with us. The bank subsequently agreed to reinstate the loan, but altered some of the terms and conditions so that the interest rate became double what Nigel had originally agreed to. After 10 years of repayments, the bank declared that unless he could sell the property or repay the loan, it would have to foreclose on him. The Financial Ombudsman Service refused to look into the matter initially and subsequently Mr Cairns received only £1,500 for the stress and anxiety of the case.

The APPG’s review, looking across 12 compensation schemes, found that over the past 20 years, the number of people affected amounted to a little over 78,000 people. When we consider some of the harrowing cases we are describing today, that number is thankfully quite small, but it says to us that it is a small enough number that these people could have timely redress and compensation, if only we had a body that could sort it out. That brings me on to another example: infected blood. During business questions this morning, the right hon. Member for Kingston upon Hull North (Dame Diana Johnson), as she always does on a Thursday, drove home on behalf of her constituents the need to compensate promptly those people affected by the infected blood scandal. In the last 24 hours, we have heard of a proposed Government amendment to the Victims and Prisoners Bill to try to bring about compensation. I completely agree with the right hon. Member that by not setting a deadline for that compensation, we allow this issue to run and run. In the other place, the Liberal Democrat peer Baroness Brinton sought to take that up with the Government, and proposed an amendment that was much more vigorous in setting a timeframe for compensation, but the Government chose not to adopt it.

I have a constituent whose friend who has been affected by the infected blood scandal. Some of the tales that she has passed on are really harrowing. Her friend said:

“In my 20s I was planning my funeral and feeling like I was contaminated and filthy. I met and married someone prepared to date a woman with poisoned blood.”

She speaks of how it caused a

“host of long-term devastating side effects”.

She continued:

“I lost my career as an IT consultant, it made me infertile so I have been unable to have a family, and we had we had to stop IVF and surrogacy attempts because I became too ill to be a parent. I’ve had brain, body, psychological and emotional impacts from this virus. And then decades of exhausted fighting for an evasive and oft-denied justice, which caused its own damage, including most recently the end of my marriage.”

Such people deserve to be compensated promptly. They do not need the stress and worry of a scheme that always seems to roll out into the future, and of having to fight at every turn.

Mass redress schemes are set up on an ad hoc basis. They are voluntary, and established to tackle a specific scandal, following failure of a given organisation’s internal complaints procedures. How do we ensure that the victims of our largest and most damaging scandals, and any unfortunate future victims, are protected from unfair treatment and appropriately compensated? We need the framework for redress to be improved to ensure that we do not make the same mistakes again. This debate is a call to action for Ministers. The Government must establish a clear framework based on best practice.

The HBOS Reading compensation scheme is another example. In 2017, after 15 years, six individuals were sentenced to a cumulative 47 years in prison for their role in a fraud that left its victims, in the words of the sentencing judge, “cheated, defeated and penniless”. Eight years on, we have had more than two years of the discredited Griggs review, and a further two years reviewing the review and coming up with new recommendations. We are now in the fourth year of the Foskett panel. We would think that by now that we would have got it right, but all the perpetrators of the crime are out of prison, the victims have yet to be compensated, and serious questions remain about the panel.

There is a set of underlying principles that would establish a common-sense bedrock for any compensation scheme and how it should be built.