We've started the year with a call to stop so called 'banker bashing' and with various investigations or reports into bank conduct by the regulator being cancelled. Not a brilliant start – and certainly a confusing one in many respects.
To the best of my knowledge, the FCA and certainly the FSA before them, have never been involved in 'banker bashing.'
Perhaps if they had been a bit more aggressive in their attempts to properly supervise bank conduct, we wouldn't have had the conveniently named 'global credit crunch' and the Chancellor would not be making worrying noises about our economy today. Anyway – as they've never been 'banker bashers', it's obvious they can't stop the practice. But that does not give them the right to pretend anyone else, who has been 'bashed' by bankers, will stop legitimately trying to get banks to behave 'fairly and reasonably' – otherwise known as 'banker bashing’.
The public, who have been given scant and rather pathetic explanations about why our multi billion pound banks nearly went bust and needed bailing out with taxpayers’ money, are not inclined to stop banker bashing.
There are many reasons for this and I find it both frustrating and illogical that, after so many years when banks have simply refused to accept any of the proposals to stop them behaving badly, the powers that be fail to understand the public view. Maybe we're not putting our case against miscreant bankers clearly enough. But if I had to explain the reasons and without writing a 500 page report which few people will actually read (as per the HBOS report), I would say we can't stop banker bashing because:
- For years and certainly from the early 90's, some banks have had policies that deliberately and wilfully harmed their clients – both business and private. Many of these policies have been proven to either breach regulatory rules and/or the common law and have resulted in massive fines but, with very few exceptions, no one has been held accountable for the damage done.
- Because no one saw fit to control or regulate the banks, their misconduct culminated in several of our biggest banks almost going bust overnight back in 2007/2008 (four did). This was so catastrophic (and the remedy was equally catastrophic) the entire Country was plunged into austerity – jobs were lost, budgets for almost every social service were cut, benefits for some of the poorest people in the Country were reduced and this is over and above the thousands of people who lost much of their life savings. But no one has been held accountable.
- For a couple of years post 2008, there was much pontificating in high places about cutting bankers’ bonuses and jailing those responsible for our economic demise. I'm not talking about the £5000 bonus for the bank cashiers or the back room staff in the local branches – I'm talking about the eye watering, telephone number bonuses for the senior executives, some of whom were the very people responsible for the massive failures that financially affected everyone - except them. However, what this cut in wages and bonuses really meant for the top dogs was their seven figure remuneration packages were briefly reduced to six figures. And now, seven years on from the heady days of banker excess, we're actually back to where we started and still no one has been held accountable for the austerity and poverty that's rife across the Country.
- This is the worst one for me – probably because as a member of SME Alliance I read about the unbelievable conduct of banks towards small businesses every day. After the credit crunch and having had billions from the Treasury, the Government, quite rightly, told the banks to get their houses in order because they had to pay their debts. I don't suppose anyone ever actually told the bankers to, “do what the hell you like and we'll close a blind eye to how you do it as long as we get the money” but in a round about and, no doubt, diplomatic way, they sort of did. And some banks, in their wisdom, looked at who had real assets to replace the virtual assets they'd been playing fantasy accounting with for so long and decided they would simply appropriate those assets. They had been doing this anyway for some years but this system of theft was rapidly accelerated after 2008. Schemes like IRHP and the misuse of EFG loans helped destabilise tens of thousands of small businesses, making way for departments like GRG or the various business recovery units, to swoop in and take whatever they wanted.
Of course business owners are neither stupid nor frightened to fight for what they've worked hard to achieve and many of them fought back against what was, at the very least, unethical conduct (which banks should not practise according to the FCA Principle 1 - A firm must conduct its business with integrity or words to that effect) and more and more frequently criminal conduct. But in general people fought their cases individually relying on, initially, the regulators (who were busy helping build the banks up again and who were increasingly more influenced by Treasury policies) and, as a last resort, the Courts. Pointless because the banks, using shareholders’ money, simply picked these business owners off like fleas from a dog. Helped by the Treasury and the MoJ, who cut legal aid left right and centre while increasing Court costs, very few business owners could afford to take on a bank with deep pockets. Consequently thousands of SMEs were wiped out (and continue to be wiped out) and no one has been held accountable.
Here we are in 2016 and what has really changed about bank conduct now compared to bank conduct in 2006? How many bankers have gone to jail? How many bankers have faced individual fines as opposed to the fines their shareholders are forced to pay as an alternative to holding individuals responsible? How many bankers and traders are back to receiving more in one wage packet than the average person earns in a life time – in some cases ten lifetimes? And what are these massive pay-outs for? Are these people brilliant entrepreneurs who, at their own risk and based on their own inspirational ideas, set up companies that employ lots of people and benefit society? Are they scientists or brain surgeons or inventors? Are they great artists or writers who will leave a cultural legacy for future generations? No – these stunning pay packets are for people who juggle and play with other people's money, assets and lives – and many of them are not very good at what they do. In fact many board members of big banks are not even bankers in anything other than collective title.
I wonder, years from now, how history will remember the top bankers of the late 20th and early 21st century? I don't think there will be any commendations in the history books and I don't think future generations will be keen to say they were related to the so called 'masters of the universe'. The legacy these people leave will be shameful.
Perhaps the most appalling thing about this social tragedy is the fact they don't care. I don't include all banks in this or even all bankers. I'm sure there are many good people in the banking industry – I know many myself. But while the saying is “cream always floats to the top”, in the banking world it seems more likely you will get to the top if you have 'essence of deadly nightshade' running through your veins. Regardless of what simpering speeches are given to the Treasury Select Committee, the fact remains that it has to be the people at the top of banks who give the orders that destroy businesses, take people's houses, steal people’s savings and literally ruin lives. But, even when faced with clear evidence of totally outrageous behaviour by people in their bank (and this includes criminal and, more worrying, psychopathic behaviour) and even when it's supported with substantial and incontrovertible evidence, these top people will smile sweetly at the media cameras and say “we have investigated these allegations and they simply aren't true.”
Please give that line full consideration because it's important and outrageous that it's true and SME Alliance has been dealing with one such case very recently. I know we all say it's common for bankers to say 'black is white' but the truth is, they are so comfortable they've got the regulators and other authorities on their side, they have convinced themselves that, because they say it, it's true. They are living in a parallel universe and believing it's the real world.
I have spent Christmas, New Year (and I'm still doing it now), going through the two reports about HBOS – although one is actually about the FSA's conduct with regard to HBOS. How anyone in authority managed to reach the conclusion one man was responsible for all the disasters in HBOS, beggar’s belief. How anyone felt the best course of action against the senior management of HBOS was to take 'no action' and let them all just swan off to other equally well paid executive positions, is nothing short of criminal. But that is what has happened to date. With the exception of Peter Cummings no one has been held accountable for the catalogue of disasters in HBOS (including far more and well documented criminal examples than the one isolated case mentioned in the Andrew Green QC report).
And this is why 'banker bashing' will not and cannot end in the foreseeable future because it is imperative that the actions of bad bankers are fully exposed, that such conduct is wiped out and those people who have broken the law, personally pay the penalty. It is the only way to restore trust, not just in British banks but in the British justice system. Equally important, it's the only way we will ever get our economy back on its feet. Small businesses in Britain employee millions of people and are crucial to the economy. SMEs, as even the Government like to remind us when it's handy to their cause, are 'the backbone of the Country'. But without proper funding and with banks free to run riot and steal their assets without penalty, we will just see more and more industries closing down, high streets closing down, in some cases entire towns closing down and eventually, our entire economy will be completely reliant on our corrupt and unethical financial sector alongside a half a dozen giant global corporations.
I don't go in for conspiracy theories – I've never met a person who was really a lizard (although I've met quite a few snakes in recent years) but I think what I've just described is called 'New World Order'. In light of this and because more and more people and organisations like SME Alliance, are sharing information and evidence to stop banks picking SMEs off one by one, I think the options for 2016 are two. One, banks stop bashing society and businesses or, two, banker bashing must be intensified until the authorities finally have to take the appropriate action, do their jobs and hold people accountable for their actions. Only then can banker bashing really stop.
I hope there will be more challenger banks available this year and I sincerely hope they set new standards in banking and that more and more people move to more ethical banks. But that won't change the legacy issues that blight SMEs – only a radical change in thinking from those at the very top of our big banks can do that. Let's hope that in 2016 they start to realise black is black, white is white and a reality check is well overdue. Surely the banking sector itself would like to see the industry cleaned up and with all the rotten apples taken out of the barrel? And the only way that can happen is for the bad seeds to be held accountable.
Finally – we all have a wish list at the beginning of a New Year. I think the SME community and certainly those abused by banks, would wish to get on with their lives, run their businesses, have adequate funding and not spend 100% of their time fighting a bullet less war. They'd like their legitimate complaints to be dealt with 'fairly and reasonably', either by the banks or by the regulatory bodies. Of course as a consequence of such wishes ever materialising, we would see an end to 'banker bashing'. So the truth of the matter is, it could stop at any time – it's all down to the banks.
Happy New year to all