Crown Currency Exchange

Russell Brown Excerpts

Tuesday 7th December 2010 Commons Chamber

[Tessa Munt]

That is quite correct. It certainly seems that on several occasions a number of people brought these problems to the attention of the FSA. One of whom was Robin Haynes, the managing director of Currency Index Ltd. He raised concerns about Crown Currency Exchange with the FSA in March 2009 and September 2010. He raised his concerns with HMRC in September 2010 and with Barclays, Crown Currency Exchange’s bankers, in May 2009. None of those appears to have been acted on.

There is also the case of a whistleblower who reported his concerns to the companies investigations branch of the Insolvency Service on 20 August 2009, but again nothing appeared to happen. It seems that none of those bodies is able to investigate a company until it has done something completely awful to its customers.

[Mr Russell Brown (Dumfries and Galloway) (Lab)]

I congratulate the hon. Lady on securing the debate, because it has been stipulated that Barclays bank raised concerns about the company prior to its collapse but kept quiet. Does she, like me, believe that that should be further investigated?

[Tessa Munt]

I hope so, because so many people were taken in by the idea that they had some security, and Barclays probably should have done something. I understand that there was a meeting between one or two company directors and their bankers, Barclays, on 21 July, and that there were concerns at the time about the company’s solvency, yet for some months afterwards people still tried to put their money into the company, without any results.

--- Later in debate ---

[Mr Hoban]

Barclays had a limited relationship with Crown. It did not lend money to Crown, but simply provided it with a bank account. It raised a number of questions with Crown, but the answers gave no cause for concern. It acted simply as Crown’s bank and had no engagement in the business.

[Mr Russell Brown]

I could ask the Minister when he believes that my constituents will receive money and how much, but I want to come back to the fact that the company was classed as a small payments institution, despite its turnover putting it in a category that meant it should have been regulated. Is he in a position to instruct the FSA to look at the more than 500 other companies that are small payments institutions to see whether they fall into a regulated category?

[Mr Hoban]

When the €3 million figure is exceeded, a company should be regulated, but that figure refers to the average monthly payment transaction. A company can therefore be turning over €36 million a year and still fall below the threshold for registration.

To conclude, I agree with the hon. Lady that the collapse of Crown Currency Exchange has hit 13,000 innocent victims and that, in some cases, the losses have been substantial. We all agree that that should not happen again, that we have to learn the lessons from Crown’s failure and that we must take all the steps necessary to ensure that consumers are better informed about the risks that they take and the rights that they have. We will be able to determine the action to be taken by the Government or the regulators only once we have received the report. We will look at the costs and benefits of regulation. I remind the hon. Lady that in last week’s debate on the retail distribution review, she pointed out the risk that more regulation poses to businesses.

We must ensure that there is proper regulation for consumers. We must learn the lessons from Crown to ensure that we put the right protection in place for consumers, given the risks involved. I assure hon. Members who take an interest in this matter that I will keep them up to date with what is happening with Crown. I recognise from the number of hon. Members present in the House tonight how important—