Commercial Financial Dispute Resolution Platform — House of Commons, 2016-12-15
Topic: Domestic Commerce
Richard Arkless (Scottish National Party, Centre-left): My hon. Friend will be unsurprised to hear that I completely agree with her. My experience is that, although many good people work in banks and we should not tar them all with the same brush, which we are inevitably tempted to do, banks see businesses and individuals in the retail sector as units to extract revenue from. Unless banking returns to being an ethical practice of looking after people’s interests, as opposed to extracting revenue, we will not make the vital cultural change necessary to sort out the issue I was particularly struck by what my hon. Friend the Member for Coatbridge, Chryston and Bellshill (Philip Boswell) said: even before a contention is raised, there is a reluctance to complain. Banks feel the inequality of arms before we even get to the courts or a dispute resolution system. I think that is a consequence of the public perception of the inequality of arms, and it has produced a fear factor. Clearly, an ADR system would go a long way to reducing that fear factor among SMEs That point was corroborated by the vice-chair of the all-party group on fair business banking, my hon. Friend the Member for Berwickshire, Roxburgh and Selkirk (Calum Kerr). He also made a good point about the Financial Ombudsman Service and inconsistencies in the adjudication of retail banking issues. During my time at a bank, I had many dealings with the FOS, and I assure Members that it was possible to put to it two cases with exactly the same facts and circumstances and get two completely different results The right hon. Member for North Norfolk (Norman Lamb) made an excellent and powerful speech, from which I took two points. The first was the effect on mental health and wellbeing, which is often forgotten about; we are not just talking about economic consequences. The second was whistleblowing, which was picked up by my hon. Friend the Member for Kirkcaldy and Cowdenbeath (Roger Mullin). The right hon. Member for North Norfolk will be pleased to hear that we intend to table two amendments to the Criminal Finance Bill. One will seek protection for whistleblowers, and the other will ask for a banking culture review. I would be grateful if he would consider them with his colleagues and perhaps support them in due course My hon. Friend the Member for Edinburgh West (Michelle Thomson) wowed this Chamber last week—I think that deserves a mention—and I do not think that any of us could have failed to be struck by her reference to the Komodo dragon. She attacked the underlying culture in banks and said how predatory they can be My hon. Friend the Member for East Renfrewshire (Kirsten Oswald) made an excellent speech. I was particularly struck by her example—not a commercial case, but a retail case—of an ordinary individual whom the bank are accusing of going to another branch with identification and withdrawing money. Surely the complaints process could look at the closed circuit television and the FOS could be more inquisitorial in assessing the case. I hope that that message will go out When I worked for a bank and a retail customer threatened to take a matter to the FOS, we were told very clearly that that incurred a cost to the bank. I forget the exact figure, but it was between £400 and £600. When it got to that point, a quick calculation was made, and if the case could be settled at less than £600, that was what happened and the bank was not dragged through the FOS. That just demonstrates that we are units to extract revenue from, and nothing more I agree with my hon. Friend the Member for Aberdeen South (Callum McCaig), who was the first to say that the ADR system in itself will not fix the entire problem. He was absolutely right to mention culture. On RBS’s approach, he was told that this was water off a duck’s back, and that is absolutely true: these are actuarial, commercial calculations. The human cost is completely negated. A calculation is made of liability and potential cost, and the bank will take whichever is lower That concludes my summary. If I missed out any colleagues, I apologise. I agree that it would be a good idea to ease access to justice for SMEs that have contentious issues with large banks. That would make it cheaper and easier, and it would certainly help to equalise the inequality of arms. However, whether a case is considered by the FOS, a small claims court, a fast-track court, the Supreme Court, the Court of Appeal or an ADR, it is the same case, with the same contract and the same terms and conditions, that will be considered from court to court, and if all those dispute resolution vehicles do their job, they ought to come to the same conclusion. Although that would be a welcome step, we need to go beyond that and look at the reasons the organisations were sold the products in the first place. That points to the culture perpetuated by the banks. If we can fix the culture and the over-aggressive mis-selling of products that businesses and retail customers simply do not understand, we will not end up in a situation where we need an ADR. Although I welcome the proposal, we need to change the culture in order to make a real difference.