19 January 2017
Government needs to act after full extent of SME banking scandal highlighted by MPs
The SME Alliance, which supports SMEs battling against fraud, corruption and misconduct in the financial sector, has demanded that the Government listens to call for action from MPs of all parties who highlighted the atrocious behaviours of banks and their advisors to SMEs.
More than 30 MPs, representing all the major parties in England, Scotland, Wales and Northern Ireland, spoke at Thursday’s debate highlighting appalling cases of business people losing their business, livelihood, homes and families because of the actions of the banks and their professional advisors and demanding redress.
This was followed by a joint meeting of the SME Alliance and the All-Party Parliamentary Group of Fair Business Banking, where MPs including Clive Lewis and Norman Lamb, who sponsored Thursday’s debate, Kevin Hollinrake, incoming chair of the APPG, and Bill Esterson, Labour’s business spokesperson, joined a discussion with Anthony Stansfeld, the Police and Crime Commissioner for Thames Valley, and former MP George Kerevan, and business people harmed by the banks. Further examples of how the banks and advisors used bullying tactics to squeeze money out of SMEs, often causing them to lose their businesses, were aired.
Among the demands from MPs were for a tribunal that can deal with disputes between SMEs and their banks, as this part of banking is not under the remit of the Financial Conduct Authority. John Glen, The Economic Secretary to the Treasury, said: “It is important to recognise the fundamental need for financial providers to act in accordance with the rules of the FCA and the spirit of its principles. When they do not act in accordance with those principles, we need to have confidence in the mechanisms that exist to resolve disputes.”
Nikki Turner, director of SME Alliance said: “The Economic Secretary appears to be moving in the direction of setting up a tribunal but what we need to see is concrete action from Government to redress the power imbalance between SMEs and their lenders.”
The SME Alliance, which was formed in September 2014 to support SMEs “battling against fraud, corruption and misconduct in the financial sector” and has led the fight for compensation for businesses harmed by the fraud at HBOS Reading (now owned by Lloyds Banking Group) and RBS, has committed to continuing the fight for victims of all the dreadful actions of those and other banks and their advisors.
Said Nikki Turner: “Yesterday’s debate showed the strength of support from all sides of the political spectrum for our fight and the banks, and their henchmen, should be on notice that we will be on their case.”
For further information contact Jason Nisse on 07769 6886618 email@example.com
Tuesday 16 January 2018
Following a series of three widely-read articles by Richard Samuel, a barrister at 3 Hare Court, in Capital Markets Law Journal (CMLJ), Parliament will be debating the proposals made by Samuel for a Financial Services Tribunal on 18 January.
Today (16 January) sees the publication of the third and final article of a series of three in CMLJ, of which the first two have attracted about 2,500 downloads and 1000 related blog page views so far.
The series has inspired an inquiry in Parliament run by a cross-bench grouping and which includes Lord Dyson, the ex-Master of the Rolls. It is the All Party Parliamentary Group (APPG) on Fair Business Banking. Its work has won support from the small and medium sized enterprise (SME) community, which is looking for fairer means of redress than the Financial Ombudsman Service (FOS) offers for mis-selling of complex financial products by banks.
In his most recent article Samuel appeals directly to the banks to support a specialist, quick and inexpensive financial services tribunal to resolve substantial disputes between banks and their customers, modelled on the Employment Tribunals. Those tribunals moved employment culture on from common law notions of ‘master and servant’ – still the language of labour markets in the 1960s – to the fairer culture we know today. For instance, they were the first forum where women could bring sex discrimination claims. Samuel argues that Financial Services Tribunals would have the same positive effect on banking culture.
This is a news story for two reasons. First, it takes the argument over an important new threshold: why a tribunal would benefit banks. Samuel points to two successes in the banking’s past where the industry offered customers favourable means of resolving disputes to stimulate its own growth: direct debits and credit cards. If today’s industry offered SMEs trusted, affordable dispute resolution through a specialist tribunal, it would be able to grow SME lending, particularly in international markets unused to the expense of English common law courts. Definitive rulings of the tribunal on the meaning of regulations would also reduce banks’ ever-increasing cost of compliance and remove that barrier to innovation of new financial products.
The second reason is the FCA’s position. At first, in 2017, it backed a Financial Services Tribunal before the Treasury Select Committee and in the press. Since then, it has decided a tribunal is out of reach. It is about to consult on expending the Financial Ombudsman Service (FOS). That is not what the APPG wants and it is not what SMEs want. FOS resolves disputes in private so it cannot move culture. Samuel argues it is not what the industry should want because it will not provide new opportunities for growth.
Lord Cromwell, Co-Chair of the APPG on Fair Business Banking, says:
'The Inquiry that the APPG has been conducting has identified clearly that banks and business customers urgently need a specialist, quick and inexpensive tribunal to settle disputes. The current option - court proceedings - is a slow and hugely expensive route that only the largest businesses can even contemplate.
At the APPG’s instigation, on 18 January 2018 the Commons will debate this issue for the second time. [Samuel's latest] article demonstrates why a tribunal makes sense for banks as well as their customers; and thereby brings new insight to that debate.'
A two-page Q&A explaining the proposal is available here.
The first two articles in the series written by Richard Samuel can be found here and here. The third article will be published today via the OUP.
Contact for the Media
For further information about this press release, please contact Alice Heathfield at 3 Hare Court- firstname.lastname@example.org or on 02074157829.
As some of you may already be well aware, the long awaited Parliamentary RBS GRG Debate is to be held on the 18th of January 2018 at 11:00am in the Main Chamber in Parliament. The debate will involve the APPG on Fair Business Banking and will discuss 'The treatment of SMEs by RBS’ GRG and how does the current system fail to protect businesses?'
"That this House is appalled at the conduct that has recently been exposed concerning the treatment of small and medium-sized enterprises (SMEs) by the Global Restructuring Group (GRG) unit of the Royal Bank of Scotland (RBS); notes that there are wider allegations of malpractice in financial services and related industries; believes that this indicates a systemic failure to effectively protect businesses, which has resulted in financial scandals costing tens of billions of pounds; believes that the solution requires the collective and collaborative effort of regulators, parliament and government; and calls for an independent inquiry into practices in respect of the treatment of SMEs and the protections afforded them, and the rapid establishment of a tribunal system to effectively deal with financial disputes for businesses."
Director of Policy and Strategy
APPG on Fair Business Banking
Members affected by this or indeed by misconduct from any Bank or financial institution, are encouraged to contact their MP's and ask them to support and attend the debate. I know many members will be attending and we look forward to seeing you on the day in the Public Gallery.
SME Alliance will then be holding our own meeting in Parliament in Room 14 from 3.00pm to 5.00pm. I'll be sending out an email with further information on this with an agenda within the next week or so but if you think you would like to attend this meeting, please could you send me a quick confirmation email as we will be holding a networking session after the meeting, location TBC but it gives me a good idea of numbers in advance.