Banking Misconduct and the FCA

Stephen Kerr Excerpts

Thursday 10th May 2018 Commons Chamber

[Stephen Kerr (Stirling) (Con)]

It is a pleasure to follow my hon. Friend the Member for Torbay (Kevin Foster), and I congratulate my friend, the hon. Member for East Lothian (Martin Whitfield), on securing this important debate.

Let me start with what we all hope is a mythical three-headed beast that guards the gates to hell: Cerberus, the veritable hound of hell. However, this beast is not mythical, but one of the largest private equity firms in the world. Its interests include private armies and arms manufacturing; it structures itself in such a way that it pays virtually no tax; and it likes to go shopping in the UK for commercial loan books. In Scotland, it has purchased almost all of Clydesdale bank’s commercial property loan book. Rather than run down its book as RBS’s Global Restructuring Group did, Clydesdale took a more straightforward approach: it sold its book to henchmen to do the work for it. Let me be clear, these are not necessarily non-performing or toxic loans; they are just non-core to the Clydesdale.

Why does Cerberus like to shop here? It is quite simple, and a matter of interest to me as a member of the Business, Energy and Industrial Strategy Committee: commercial lending is unregulated and our insolvency system is one of the most creditor-friendly in the world. Firms can buy a loan book, scour the one-sided contracts for any technical breach and, even if a loan is being serviced, put the company into administration, sell the assets and, if there are personal guarantees involved, go for personal bankruptcy and the family home of the guarantors.

All that brings me to an illustration of the individual human toll of banking misconduct. Let me read some very poignant words that were sent to me by a constituent. This businessman’s experience relates to Clydesdale bank, but we all know that we could substitute the name of almost any bank. He says:

“One very personal matter I can confide to you”

is that

“as a direct result of Clydesdale Bank’s strategies, actions”

and

“correspondence, I had a nervous breakdown, coming very close to a life-threatening condition.”

He goes on to say:

“Many business people would not admit to the shame of the impact that Clydesdale had on their life and that of their families. For that reason alone and not that of revenge or financial redress I would ask that this issue is brought out into the open for MP’s to discuss the legacy left. It has been a very high cost in many ways.”

Finally, he says:

“My business interests have survived just, but I can no longer play any part in developing the Scottish economy as a result of that period, and that is a high cost and a loss to the Scottish economy.”

I am very grateful to him for giving me his brave testimony. It is truly shocking that an individual who only ever set out to generate an income and run a good business has been not only financially damaged, but stripped of his plans and his ambitions. His is just one story, one life ruined, but of course we know that it is replicated in every constituency across the country. What has our small business community done to be treated in this way? Surely it deserves better. It has never been more important for the British economy—

[Kirstene Hair (Angus) (Con)]

Does my hon. Friend agree that the recent section 166 report into the Royal Bank of Scotland’s misconduct was limited to only those cases from 2008 to 2013, which means that victims such as my constituent Mr Nigel Henderson, who was going through this from as early as the 1990s, does not have a voice?

[Stephen Kerr]

My hon. Friend makes her point, which I will repeat: surely these business people deserve better. It has never been more important for the British economy to support small businesses; they are the engine for growth. We need to draw a line in the sand, provide redress for those still suffering as a result of bank misconduct and put safeguards in place so that this cannot happen again. If we are to learn anything from the scandals that have plagued the commercial finance sector, it is that we must look at the way that we treat our businesses. That is why I support the motion today, and why I reiterate my support for a full public inquiry.