Banking Misconduct and the FCA

Siobhain McDonagh Excerpts

Thursday 10th May 2018 Commons Chamber

[Siobhain McDonagh (Mitcham and Morden) (Lab)]

Thank you, Madam Deputy Speaker. To attempt to stay within the time limit, I will abbreviate my contribution. I rise to speak on behalf of two constituents, Mr S and Mr A, who I believe may be in the Public Gallery today, both of whom I have attempted to assist, without success. They have both had a very difficult time.

Mr S is a former owner of a successful club and restaurant business in Chelsea and banked with RBS until 1998. In 1993, his account was suddenly moved to the Specialised Lending Services division of RBS, which was subsequently renamed Global Restructuring Group. Mr S felt bullied by the bank to appoint its manager as a shadow director. In the eight months of this new management, £500,000 went out of his account and to date remains unaccounted for. His club lost its licence and was forced to close. Prior to the bank’s intervention, the value of the business was £2.25 million. At that point, it was just £100,000.

Mr S then spent £25,000 on obtaining a new licence before RBS Specialised Lending Services suddenly ordered payment of £500,000. The bank forced the business to close and tried to develop it for profit. Mr S was evicted from the neighbouring maisonette and made homeless. The bank’s actions lost Mr S his home, his business and, ultimately, his wife. Twenty years on, Mr S is still traumatised and has still not recovered financially.

My second constituent is Mr A, the former owner of an estate company in Kent. In this case, the bank was HSBC. The bank agreed to provide partial funding for a £2.2 million development project that started in 2007. It was approximately 75% complete when HSBC stopped the period funding payments. The UK economy was suffering and HSBC’s policy was to treat construction projects as a “restricted sector” for loans. This restriction came into effect in early 2008. To continue funding that project, HSBC applied to its central committee in Calcutta, assuring Mr A that his case was nothing more than a formality. To enable the project to continue, Mr A personally funded a further £150,000, exhausting his resources. It took a full year until HSBC confirmed that there would be no further funding. The works stopped, the site was set on fire by local vandals and Mr A was forced to issue court proceedings. Two weeks before the trial, HSBC took action to place the business into receivership, signing a consent order to stop the trial, which was accepted by the High Court, bankrupting Mr A.

Mr A has lost his business; he has lost his house; he has lost his savings. He is now living in rented accommodation and depends on state benefits. He is understandably suffering from stress and has been classified as disabled. The consequences of HSBC’s actions are lifelong.

How can it be that in the 21st century banks can behave in this way and are free from any retribution?