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Andrew Bailey, CEO
The Financial Conduct Authority
25, The North Colonnade,
Canary Wharf, London E14 5HS
7th May 2018
Dear Mr Bailey,
At a time when more and more bank misconduct is being exposed in the public arena and when more than ten years since the HBOS Reading fraud was first uncovered, we saw bankers jailed, more and more people are naturally becoming concerned about the role of the regulators and what they will do or are doing following the most recent revelations. In particular, many of our members would
like to know what action the FCA (and the FOS) will take for the numerous, serious breaches - possibly criminal - of regulations by the GRG division of RBS now the section 166 report into that conduct is readily available to the public?
Please don’t think this letter is about allegations and grand standing, that is not the point at all. It is far more important than that. Our members are genuinely concerned that, in many cases, the regulators are giving the impression of working to protect the banks and conceal the misconduct of certain directors, senior executives and others. Such a scenario, as we suggested in our letter to you
in August 2017, can only result in serious miscarriages of justice because, for example, the judiciary may have been misled about the conduct of RBS/GRG. If nothing is done now to penalise and curtail such conduct, then the judiciary will still be in the dark and the same miscarriages of justice will continue to occur.
We would like to be able to say that, in the last year we have seen the situation between SMEs and the major banks improving. Unfortunately, the opposite is true. We are seeing cases coming in huge waves. Frequently we get a spate of cases coming in from a specific bank (and this is not just limited to RBS or Lloyds) over short periods. Unannounced drive-by valuations crippling clients’ loan to value, instant removal of overdrafts, removal of loans with no explanations, the immediate instruction of LPA Receivers, calling in of personal guarantees on directors’ homes because regulated mortgages are subsumed by unregulated commercial guarantees – these are just a few of the issues that are devastating and destroying our members and of course many more of whom we have no knowledge, on a daily basis and at a time when we are led to believe banks are somehow being made to behave.
We would ask you to consider the following four points and give us your comments for us to pass on to members. It may be that lack of transparency possibly due to Section 348 of FSMA 2000, means you are doing more to remedy the situation of how banks treat SMEs than the public know. Therefore, we would ask for as much transparency as you can give and which may help members
understand your intentions and policies going forward. With the limited knowledge we have of what is happening in the regulatory arena, it does seem the regulators are continuing to protect banks rather than regulate them. We are naturally concerned.
Our members biggest concerns are:
Repeatedly we have heard the question asked - how banks will regain public trust? Our members are concerned that until we can have trust in our regulators, we will never be able to regain trust in our banks because surely, until misconduct in the financial sector is seriously challenged, those who find it advantageous to exploit SMEs will simply continue to do so. An obvious example of this is how the
HBOS Reading fraud was able to cause absolute misery and distress for SME clients for many years and until the culprits were jailed in 2017, even although the bank identified serious irregularities about the conduct of Lynden Scourfield and started its investigations as far back as 2006.
Perhaps there has never been a more damning document (that we the public know of thus far) than the section 166 report into RBS GRG so we would like to know, what action is the FCA going to take against those executives of RBS who oversaw, sanctioned and allowed such despicable policies to operate in a state bailed out bank? A bank which of course is likely to be the subject of a multi-billion
dollar fine in the USA in the very near future. The lack of transparent action to date by the FCA suggests the report has come and gone and both the Bank and the regulator just hope the SME Sector and the public will forget about it. Without doubt, those affected are not in a position to forget RBS GRG as they are still living with the consequences and RBS (by no means exclusively) is still, in many cases, persecuting its customers.
We sincerely hope the victims won’t have to wait another 10 years for justice as was the case with HBOS Reading. Who, if not the FCA, do you advise SMEs and the public to rely on to make our banking system fair, safe and reasonable? Additionally, to who, given the disappointing performance of the FOS, should SMEs address their concerns and complaints?
We are in the process of collating information our members have made available, so we can compile a report for the FCA, the APPG on Fair Business Banking and the TSC which we hope will give maximum clarity and insight about the horrendous treatment so many SMEs are still receiving. We hope this report, which should be finished by the end of June this year, will prove useful to you and
other authorities. In the meantime, any enlightenment you can give on what will happen next regarding the Section 166 GRG report, would be gratefully received.
Finally, may we remind you that the issues raised in this letter are in no way academic. They affected and continue to affect real people with real lives, many of whose lives have been totally and utterly destroyed, through no fault of their own. We thank you in advance for your attention to this letter and look forward to your reply.
Nicholas S B Gould (chairman of SME Alliance) and Nikki Turner (director of SME Alliance)
SME Alliance Ltd. Company No. 09280003. Registered address: 3 Morley's Place, Sawston, Cambridge, CB22 3TG www.smealliance.org firstname.lastname@example.org
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