But back to Wednesday – as members will know, we wrote to Ms Leadsom in January requesting a meeting because of what she had said in a Back Bench Debate in December 2014 on the subject of IRHP and the FCA redress scheme. We did discuss IRHP at the meeting but, as I said after the meeting at No 10, I am not really the person to blog on that subject which, I think, remains a contentious issue.
However, the overall subject of our meeting and the reason we were there, was to talk about the bigger picture which is – when things go horribly wrong between a bank and an SME client, whether the cause is IRHP, EFG’s, Asset stripping or just sheer bloody mindedness, where do we go? The FOS can only compensate individuals or companies up to £150k and the FCA insist they do not deal with individual cases. So who does Joe or Joanna Blogs Ltd turn to when a bank ruins their business?
As things stand, our only real option is civil litigation – which is a perfect situation for banks with deep pockets full of shareholders money and their choice of legal representatives but a total disaster for SMEs. If your business has been damaged or ruined by bank conduct, the one thing you’re unlikely to have is the suitcases full of money needed to take on a big bank in their preferred arena. And now that Court fees are increasing, this is becoming an even more untenable situation.
This was the case we were making yesterday. And, while I know many SME members are not over enthusiastic about the way our MPs or Ministers have progressed any really meaningful reform of bank conduct (seems to us banks can still stick two fingers up at SMEs and even at our elected representatives) I do think Andrea Leadsom and Guto Bebb really did listen and take on board the dilemma we were high lighting.
Andrea Leadsom asked us what we want done to change this situation and our common sense lawyer, Nick Gould, said we want a sort of “FOS Plus.” I say “sort of” because as Jon Welsby pointed out, it takes a different skill set to mediate the problems of companies that have potentially lost millions and the independence (or lack of) of the IP’s and lawyers involved is also part of that pie. However, we have made the point we urgently need an alternative to costly litigation when things go wrong and the point has been accepted.
The next step is – we have been asked to prepare a document explaining both the problem and our idea’s or thoughts on a resolution. In other words “What we want.” That is a huge step forward because, if we could be instrumental in affording SMEs that kind of protection, then we would have gone a long way to levelling a very uneven playing field. Of course, in some cases, disputes would still progress to litigation. But the ability to avoid this in the majority of cases might make banks think twice about their conduct to SMEs. And let’s face it, given the size of their legal bills, our suggestion would probably work out cheaper for the banks? Although I can think of a few big law firms who wouldn’t thank us for curtailing their business! Acting for big banks v SMEs has been a very rich gravy train chugging along for years.
I am well aware (before someone points out the obvious) many SMEs who have had their cases adjudicated by the FOS or whose businesses have been wrecked by systemic abuse which the FCA can investigate, are not happy with either organisation. Some would say our regulators have a bias towards the big banks or that regulatory capture or political influence makes them ineffectual. So the last thing we want to do is add a third strand to what some would say are totally unsatisfactory organisations. Obviously a lot of thought needs to go into how a potential mediation or alternative dispute resolution process should be structured. Equally obvious, it would have to have serious powers or the banks would just ignore it. All things to be carefully considered – but how good is it we can even start to consider such a thing? I think it’s brilliant.
And for any who think this could all come to nothing and may just be pre election posturing. Well who knows? But being a glass half full sort of person I think it can happen if we are determined to make it happen and anyway, this is really about common sense rather than politics. Even politicians can see that!
Of course, no one knows which political party or parties will be in power after May 7th. And our point is equally valid for who ever wins the election. All the same we’d like to thank Andrea Leadsom and Guto Bebb for inviting us to meet with them. It was very positive.
Also very positive yesterday was the brilliant success of Derek Carlyle in his 7 year battle against RBS. Here’s his story: http://www.heraldscotland.com/mobile/business/company-news/rbs-fails-in-seven-year-pursuit-of-bankrupt-developer.120478917