Mortgage Prisoners

Stephen Kerr Excerpts

Thursday 6th June 2019 Commons Chamber

[Kevin Hollinrake]

indicated assent.

[Stephen Kerr (Stirling) (Con)]

indicated assent.

--- Later in debate ---

[Stephen Kerr (Stirling) (Con)]

I pay tribute to my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) for all the hard, unstinting work he has put into highlighting this issue and bringing light to what is, I fear, a grave injustice that must be put right.

I also pay tribute to my hon. and gallant Friend the Member for Beckenham (Bob Stewart) for—[Interruption.] He says that he does not think I should, but I think so, because the opening lines of his speech will be etched in many of our memories on this day of all days. I would like also to pay a compliment to the Prime Minister, who spoke movingly, and inspirationally for all of us, this morning.

I congratulate my hon. Friend the Member for Dover (Charlie Elphicke) and the hon. Member for East Lothian (Martin Whitfield) on securing this debate. In my capacity as vice-chair of the APPG on fair business banking, I have seen at first hand the damage done by vulture funds. Reference has been made to the impact on mental health, which is absolutely an issue that damages families and, as my hon. Friend the Member for Thirsk and Malton said, the life chances of the people affected.

In the commercial lending space, RBS, Lloyds, Ulster Bank and AIB have sold off tranches of their books to vulture funds. Most notoriously, Clydesdale and Yorkshire Bank sold off its entire commercial real estate book to the vulture fund Cerberus, leaving thousands of businesses with unregulated contracts at the mercy of an unregulated fund with a rapacious appetite. I doubt that many business people realised that when they walked into their high street branch asking for a loan to build their dream or grow their business, they could be moved, without their permission and at the stroke of a pen, completely outside the regulatory perimeter to become no more than fodder for the vultures. Asset-stripping of companies is startlingly easy in the face of one-sided contracts and no regulatory protection. The FCA, UKAR and the Treasury will argue that they have insisted that the company sitting between the investors and the customer is regulated and that that has guaranteed that customers will be treated fairly, but this is no better than putting a wolf in sheep’s clothing. The APPG can say with certainty that the experience of businesses from constituencies all over the UK is that these funds certainly have the appetite and character of a wolf.

I would like to say at this point how much confidence I have in the Economic Secretary to the Treasury, who is, in my own experience, a very fair and good man. I enjoyed a visit he paid to Stirling not so long ago, when I discovered through first-hand contact his commitment to principles of justice. He has integrity. That is why, when I raise these issues with him this afternoon, I feel confident that he is facing in the right direction and will wish to do something about the specific cases that have been mentioned and the overall issue that needs to be rectified.

I want to refer to something that has particular relevance to Scotland. CYBG has recently acquired Virgin Money and is rebranding itself as a fresh-faced challenger bank while its former customers battle for their homes and livelihoods in the clutches of Cerberus. Let us be in no doubt: CYBG’s “clean start” and “fresh face” is at the expense of the thousands of hard-working, ordinary citizens who are battling, to this day, because of what has happened to them on account of the actions of Clydesdale and Yorkshire Bank.

I am frankly astounded that Clydesdale is evading its responsibility for the customers whom it sold down the river because it, as a bank, no longer wanted them. I was particularly astounded that it took one of its former customers, John Guidi, to go on hunger strike outside its Glasgow office before it would so much as give him the time of day to discuss his situation. Fortunately, a combination of regulatory pressure and a high press profile has resulted in discussions, but two months on we have still to hear that John Guidi’s situation has been resolved.

On 19 March, in response to an urgent question from the hon. Member for Lanark and Hamilton East (Angela Crawley) about Clydesdale Bank and John Guidi’s situation, my hon. Friend the Economic Secretary to the Treasury said:

“I am pleased that the sale of loan portfolios to third parties is now covered by the standards of lending practice—overseen by the Lending Standards Board—to which Clydesdale is a signatory. That means that it is now committed to ensuring that third parties that buy loans have demonstrated that customers will be treated fairly, and to allowing customers to complain to the original lender if there is a dispute that cannot be resolved.”—[Official Report, 19 March 2019; Vol. 656, c. 943.]

Unfortunately, for all the many victims, some of whom are in the Gallery, that will be too late. Does my hon. Friend agree that if CYBG, soon to be Virgin Money, is so sure that it conducted itself with impunity when it decided to offload these loans—many where payments were up to date—to Cerberus, it should review those historical cases in line with the new standards of lending practice? That would be the act of a model litigant providing equality of arms.

The four largest banks in Australia—including National Australia Bank, CYBG’s parent company at the time—have recently signed up to that code of conduct, as have the Australian Government. Being a model litigant is in part defined by not relying on a merely technical defence against a claim and considering alternative dispute resolution options. CYBG is at a turning point, and I encourage it to face up to its responsibilities and demonstrate to the public that it really has changed. Otherwise, it too will sadly be shown, in the minds of many people, to be no better than a wolf in sheep’s clothing.