Banking Misconduct and the FCA — House of Commons, 2018-05-10
Topic: Domestic Commerce
William Peter Wragg (Conservative, Centre-right): I congratulate the hon. Member for East Lothian (Martin Whitfield) on securing this debate, and I pay tribute to my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) who chairs the all-party group on fair business banking and finance I would normally begin by saying what a pleasure it is to speak in such a debate, but although it is always a pleasure to speak with you in the Chair, Madam Deputy Speaker, I do not feel that such a sentiment is appropriate, given the seriousness of the issues we are discussing. It is clearly far from a pleasure for thousands of business owners up and down the country who have had their lives and livelihoods destroyed by a broken, and in places rotten, banking system. As I have done previously, I shall refer in particular to one of my constituents, Mr Eric Topping, whose business was destroyed by the iniquity we are debating today There is clearly no easy solution to the mess we are in—it is hard to find a solution to get the redress that so many victims deserve, to rebuild crushed livelihoods, or to restore public faith in the system. There are, however, three steps to take, each of which might help in part. First, we need some form of acknowledgement that what my constituent, Mr Topping, has suffered is an outrage and an injustice. His complaint was dismissed out of hand because the issue occurred in 1998, and therefore outside the "relevant period" that was set arbitrarily at between 2008 and 2013. Whatever form of redress the Government, regulators or banks come up with, they must consider events before 2008 and the narrow scope of the FCA’s skilled persons reports. They must also look beyond RBS GRG, and into its precursor bodies such as the "specialised lending service", and any other sham department, in whatever bank, that was engaged in systematic and organised fraudulent asset stripping Secondly, it is clear that the Financial Ombudsmen Service lacks teeth as a method of redress, given that in most instances it can look only at cases involving microbusinesses with 10 employees or fewer. With claims capped at £150,000, thousands of SMEs affected by this scandal cannot apply. There is a clear problem for businesses with more than 10 employees, as their only option is to go to the courts. That is too expensive and places small businesses against international financial institutions, which is a complete mismatch In a move that would be laughable if it were not so unjust, in the bank’s final letter to Mr Topping, RBS’s director of operations suggested that he seek redress through the Financial Ombudsmen Service, and helpfully enclosed a leaflet to that effect. RBS knew, however, that Mr Topping’s business was too large to come within the scope of the ombudsmen’s remit, and by suggesting such a move it was either incompetent in its advice or it was simply mocking him—I am not sure which is worse. Proposals for enlarging the remit of the ombudsman are not the answer—as I have said, it lacks teeth—and there is a gap in the current structure that must be filled. It is necessary to have a completely independent system or tribunal that sits outside the regulatory structure and has sufficient powers and knowledge to deal with complex financial disputes that include contracts, insolvency and all associated issues. Such a system must be able to address the backlog of legacy cases and ensure that those who have been mistreated are given an outlet through which their grievances can be heard, and suitable redress awarded. Any system will need to address the statute of limitations so that victims are not barred from taking action Finally, as I have said, these issues are no longer just about RBS or even the banks themselves, and it is clear that we have had a systemic failure. This issue has become too wide ranging for either the Treasury, the Business, Energy and Industrial Strategy Committee, or even the excellent all-party group on fair business banking and finance to deal with, and it is now of such scale and complexity that it demands a full public inquiry. A scandal such as this, just like LIBOR before it, is yet another reason why people and businesses lose faith in the banking sector. Faith in the banks is essential for faith in our whole economy, but SMEs, which are the lifeblood of that economy, are now reluctant to borrow from such institutions. A full public inquiry would be to the benefit of financial institutions, the business community and the wider economy. We must draw a line under the past, obtain redress for our constituents who have been the victims of financial misconduct and create an environment in which trust in financial institutions can be restored.