Professional Standards in the Banking Industry Debate
Full Debate: Read Full DebateSheila Gilmore
Main Page: Sheila Gilmore (Labour - Edinburgh East)Department Debates - View all Sheila Gilmore's debates with the HM Treasury
(12 years, 1 month ago)
Commons ChamberI want to take the Chancellor back to his comments a few moments ago in which he quoted something that had been said by Mr Diamond before the Treasury Committee. Is not part of the problem that that format does not get to the bottom of these issues? Statements of a general nature were made about some discussion that took place with certain Ministers. Do we not need a judicial inquiry?
I am very grateful that I took that intervention, because right at the end, the hon. Lady said that there were allegations that Ministers had been involved. As I said, it is extraordinary that they are all blaming each other. The people who were in the Treasury are blaming the people who were in No. 10, and the people who were in No. 10 are blaming the people who were in the Treasury. Why do they not take responsibility collectively for the absolute mess that they made of regulating our banks, including the LIBOR market, during their time in government?
I suspect that we are concentrating on how we can improve the system for businesses, rather than for the banks. I want to concentrate on some of the activity that has been drawn to my attention by my constituents. Small businesses are hurting at the moment, and some of them are reluctant to come forward because they are embarrassed at finding themselves in such a fiasco. Those people are running businesses that are in severe financial difficulties because of the activities of the banks.
To a certain extent, I agree with the Chair of the Select Committee, the hon. Member for Chichester (Mr Tyrie), and others who said that the vast majority of people who work in the finance and banking sector are decent, hard-working people. Many are not on particularly large incomes. Talk of the bonus culture tends to concentrate on the Bob Diamonds of this world, but many of those people on low incomes depend on their bonuses to get by. There is no doubt, however, that the business is full of wide boys and spivs.
I have seen e-mails spanning a period of time involving a company called Guardian Care Homes. That company has been successful in some of its prosecutions. For Bob Diamond to say that he did not really know what was going on in his organisation is complete and utter nonsense. For two months, The Daily Telegraph trailed the activities involving Guardian Care Homes.
I also want to mention an issue that was drawn to my attention some 18 months ago. I spoke to the Chairman of the Select Committee—I am sorry that he is no longer in his place—one evening after a Division, and expressed my serious concern to him about the sale of hedges and swaps. According to my inquiries, Barclays appears, a number of years ago, to have set up a specific section to target and home in on leisure facilities, caravan sites and the like. In July 2005, one of my constituents was approached by Barclays and asked whether he would go back to banking with it. He was offered a loan, as well as two swaps to protect him against fluctuations in interest rates. Over a short period of time, the value of his assets climbed. The bank then approached him and asked him to consider some of its hedges.
I want to thank the Financial Secretary to the Treasury, who is in his place, for providing some of the FSA’s findings on these matters over the past couple of days. The manner in which some of these banks have been operating is absolutely unbelievable. If I could not see it in writing myself or hear what constituents were saying, I would not have believed it, as there has been 100% hedging of some of the loans offered.
This time last week, I met another constituent who also operates in the leisure and caravan sector. He is a partner in two small businesses, running two caravan sites in my constituency and two in a neighbouring constituency. His bank—not Barclays bank, incidentally—pulled him in and encouraged him to have a look at another three caravan sites that were on the market. The guy was not that keen, but he went away and considered the proposal, and came back to the bank to say, “Yes, I might be interested in a loan.” He was offered the loan, but only on the basis that he took out more swaps.
That sort of activity has been going on, but I really do not know how many people out there have been caught up in it. It is interesting to note that the Financial Services Authority’s letter to Financial Secretary says:
“During the period 2001 to date, banks sold around 28,000 interest rate protection products to customers.”
What does that mean? How big is the scale of this? That is particularly important if compensation has to be paid. There is a serious concern that if compensation is paid, it could bring banks down. When it comes to protection, people are looking for answers.
Does my hon. Friend agree that it is not just businesses, but some individuals who have been led into over-borrowing and so forth? These people have been affected, and it appears from polls reported today that 55% of them think there should be an independent judicial inquiry to get to the bottom of these issues.
Let me tackle that quickly. Yes, during the last couple of days, I have received more than 30 e-mails from constituents, saying that they want a proper inquiry. Here we are in this Chamber, but we all have to stand outwith it. What will people have witnessed here this afternoon? Partisanship. I understand that we can all get dragged into it, but I have to say that people have no faith in this place. On both sides of this House, we see ex-bankers and ex-financial advisers. Quite honestly, Madam Deputy Speaker, if you were to ask me, “Would you trust these people?”, my answer would have to be no. [Interruption.] If we seek a genuine answer, this problem needs to be tackled by being placed in the hands of someone else. [Interruption.] Conservative Members should calm down. I have listened to the hon. Member for Rochester and Strood (Mark Reckless), who used to be in the business, and to others. It could be due to my ignorance, but I have to say that financiers and bankers could be from another planet. They know the ins and outs, but as the FSA has said, when the issues are complex, it hides what is going on.