Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what steps her Department is taking to ensure that banking misconduct compensation schemes provide independent mechanisms for reviewing cases where applicants were wrongly excluded from previous redress processes.

Successive Governments, as well as the Financial Conduct Authority, working with the banks, have taken steps that aimed to address historical banking misconduct issues. This included helping to establish and support a range of compensation and redress schemes to enable those affected to seek appropriate compensation, with interest rate hedging product (IRHP) disputes alone paying out more than £2bn to affected customers. These IRHP schemes included an in-built appeal mechanism, and each bank’s scheme was scrutinised by an independent reviewer, the appointment of which was approved by the FCA.

In addition to steps that were taken to enable investigations and compensation to be paid, the regulatory framework has also been strengthened. Historically, the Financial Ombudsman Service only had jurisdiction over disputes involving microbusinesses, but this was expanded by the Financial Conduct Authority in 2019, with over 99% of small businesses in the UK now eligible to bring their complaints to the FOS. In future, this would ensure access to clear and independent dispute resolution through a public body able to require compensation to be paid where misconduct has occurred.