Financial Conduct Authority

Debate between Simon Burns and Guto Bebb

Monday 1st February 2016 Commons Chamber

[Guto Bebb]

I am grateful to my hon. Friend for those comments. I will touch on RBS’s involvement in the redress scheme.

There are concerns about the way in which the interest rate redress scheme was put together. It was a voluntary agreement. One of my first questions, which I still have, was about the arbitrary way in which 10,000 businesses were excluded from the scheme for no apparent reason. Because of an arbitrary decision by the FCA, those businesses were excluded from any means of support under the redress scheme. That decision still is not fully understood. I have raised that issue before and would be more than happy to hear the Minister’s comments on it.

Of more concern is the fact that, throughout the process, there has been a lack of willingness from the FCA to explain what they are doing. For two years, the redress scheme was in existence, but the FCA did not share the rules of the scheme. Businesses that had been declined redress within the scheme were appealing the decisions without knowing what the rules were.

[Sir Simon Burns (Chelmsford) (Con)]

Does my hon. Friend accept that people such as my constituent, Larry Berkovitz, have been so frustrated by how long, drawn-out and time consuming the process is that they feel as if they are hitting their head against a brick wall to try to get justice?

[Guto Bebb]

I sympathise fully. When I established the all-party parliamentary group on interest rate swap mis-selling, I expected it to be closed within a year. Four years later, I am still raising debates on the issue, so I share the concern that people are knocking their heads against a wall and getting nowhere.

The Treasury Committee intervened and the FCA finally published its rules in February 2015. Therefore, it can be argued that for two years, every appeal was being made in the dark. The release of the rules led to a further complication. It suddenly became apparent that the way in which the customers of RBS were being treated in the redress scheme was significantly different from the way in which the customers of other banks were being treated.

The APPG did a significant analysis of cases that had been through the redress scheme. It showed clearly that the chances of getting a swap for a swap outcome was much stronger for RBS customers than for customers of other banks. A swap for a swap outcome basically means that the redress to which someone is entitled is significantly less than it would otherwise be. The reason was that RBS appeared to be relying on a generic condition of lending that was not deemed significant by some banks within the review, but that, for some reason, was deemed sufficient for a swap for a swap outcome by RBS.

I met RBS with other members of the APPG to highlight the discrepancies. We were told that the rules that were released to the Treasury Committee were not rules, but principles. Although those principles had been established for the scheme, apparently 11 different methodologies were agreed with 11 different banks. It is arguable that the Treasury Committee was misled because when it asked for the rules, it is unclear whether it got rules or principles.

I ask again: if a business does not feel that it received an adequate offer from a bank, how can it challenge the decision if it does not know what the methodology was? I met the FCA, because RBS was perfectly happy about this issue. It said, “We have a methodology that we have agreed with the FCA and we are delivering on it.” When I met the FCA, it confirmed that it had different methodologies within the scheme, but, again, it did not share those with me. If an RBS customer is unhappy with their outcome, it is difficult for them to argue their case, because they are not being provided with the information that they need to do so.

Oral Answers to Questions

Debate between Simon Burns and Guto Bebb

Thursday 29th November 2012 Commons Chamber

[Guto Bebb (Aberconwy) (Con)]

T5. A letter from the Transport Minister to the Welsh Select Committee highlighted the fact that the Welsh Assembly Government have made no case for investment in the north Wales main line. As a result, my right hon. Friend the Secretary of State for Wales has set up a taskforce to make the business case for that investment. Will the Minister assure me that the Department for Transport will work closely with that working group in order to make the case for that crucial transport link in north Wales?

[The Minister of State, Department for Transport (Mr Simon Burns)]

I am grateful to my hon. Friend for that question, because, as he will probably be aware, the Welsh Government were particularly anxious for electrification of the valley railways and the extension of electrification from Cardiff to Swansea, which is now happening. They will be looking at and pressing the case for electrification in the next tranche from 2019 to 2024 for north Wales. My right hon. Friend the Secretary of State for Wales strongly supports that, and we will work with the Wales Office and Welsh Government to put together a proper case for consideration.