Statement on FCA consultation on extending the FOS' remit - 22 January 2018


All options must remain on the table, including legislation

The APPG on Fair Business Banking has for years been leading the call for an independent, quasi-judicial dispute resolution system between businesses and banks. The current proposals by the FCA will not solve the current crisis, nor will its sole implementation provide adequate solutions for the resolution and restitution required to move on from the current crisis.

Andrew Bailey has already stated, and this consultation makes clear, these are a series of measures that the FCA has identified based on what it is able to do within its powers. This is not what needs to be done to properly and robustly protect businesses, and is a critical point.

The consultation specifically excludes measures that require any form of legislation, as it is not considered a viable option in the ‘current climate’. What kind of message are we sending our businesses by saying we don’t have the legislative time to deal with this problem, which remains a festering sore in the relationship between banks and businesses?

Kevin Hollinrake, current vice-chair and incumbent co-chair of the APPG says:
‘Widening the scope of the Financial Ombudsman Service would not bring the required transparency to the system and will still leave many companies unable to access justice. Many of these cases are highly complex and only an experienced judge supported by financial experts would allow a proper analysis of the facts and allow the inappropriate and sometimes illegal actions of banks to be heard by the press, public and politicians. The APPG for Fair Business Banking believes that a specialist transition tribunal would provide a much more effective dispute resolution system and would not require primary legislation to be put into place. We call upon the FCA and the Treasury to work with us to make sure we deliver the right solution as quickly as possible.’

Norman Lamb, current vice-chair and incumbent co-chair of the APPG says:
‘They just don’t get it! This proposal falls massively short of what’s required to give justice to the owners of small businesses who have been destroyed by banking malpractice. And we need proper protection for whistleblowers who play a vital role in maintaining the integrity of the banking system.
Whilst the APPG welcomes the proposals for an increased payout limit for simple cases, and the inclusion of guarantors in the scheme, we are very clear that these measures will not have the powers or scope deal with the spectacularly complex landscape of dispute resolution, and that further measures are required that will necessitate Government intervention in some form, whether via secondary or primary legislation.’

This has been backed up by the backbench business debate on 18 January and supported by the chair of the TSC, Nicky Morgan, who specifically stated that she would ‘welcome confirmation that the Treasury does not rule out a legislative approach to establish a new tribunal or to introduce a perimeter change, if either were deemed appropriate.’

We therefore take heart that the newly appointed Economic Treasury, John Glen MP, has stated that he will ‘stop at nothing’ to solve this crisis. The consultation today is a welcome, albeit small, step forward, and we must be careful to not assume this will fix the current problem. It will not. Stronger action is required.

Further Resources:

Andrew Bailey’s evidence in front of TSC:

‘Up until the summer, I was of the view that it would be more sensible, in one sense, to take the route you are going down of a formal system. That would require legislation.’ ‘I have to tell you that I do not think that is going to happen, in the current situation, so we are going to go down the other route.’

Catherine McKinnell: ‘You have mentioned in responses today and previously the possibility of setting up a resolution mechanism dispute system for SMEs. What have you done to bring that to fruition?’

‘I have tried to cover that in an earlier answer, so I will be short in reprise of it. There were two ways we, as a whole—because I am afraid it involves you as well—could have gone with this. We could have gone down a legislation route or we could have gone down a route of extending the ombudsman scheme and introducing quite new elements into that. Our judgment at the moment, and why we intend to consult on the second of those, is that it is a more viable alternative in the current climate than the first one. To be frank with you, I am not pinning my hopes on legislation.’

Debate on RBS on 18 January 2018

Nicky Morgan: ‘As we have heard, the FCA told the Committee in October last year that it is considering broadening the scope of the Financial Ombudsman Service, but there is concern that the Government might not be prepared to consider a legislative solution. I would welcome the Minister addressing that point. The House will have to seriously consider whether the FCA solution is merely a sticking plaster, and if so whether the responsibility falls to us, as parliamentarians, to consider what legislation might be required.’
‘As we have heard, one of the solutions could be a new dispute resolution regime for SME financing. I recently discussed such a proposal with my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) and the all-party group on fair business banking and finance, which has done important work in this area, on which I congratulate it. Another possibility would be to bring corporate lending of a certain size within the regulatory perimeter, thereby allowing the FCA to consider taking action against firms directly for any failings. Those are not mutually exclusive suggestions. I would welcome the Minister’s commitment to publish the Treasury’s analysis of the costs and benefits of moving the regulatory perimeter on small business lending. I would also welcome confirmation that the Treasury does not rule out a legislative approach to establish a new tribunal or to introduce a perimeter change, if either were deemed appropriate.’

It is also important to note the Minister’s response:
John Glen: ‘I want to make it clear that in doing this job and in addressing the issues that have been raised today, I will stop at nothing in making improvements.’
‘As the industry, the FCA and the Treasury progress discussions on this issue, all avenues will be considered.’
‘SMEs’ improved confidence in the mechanisms to achieve redress from banks is crucial. In my role in this Government, I will be doing everything I can to ensure that the injustices that have been discussed today are addressed.’

  1. We have been continually let down by the Ombudsman Service and the FCA by their failure to support us in our struggle against HSBC Bank. Criminal acts have been committed by this Bank which have had a devastating effect on our family lives, we are currently facing demands for payment of guarantees which total £50,000 but the Bank is claiming payment of £90,000, claiming a first charge on my home, a 2nd charge on my son’s home, a mortgage on mine and my wife’s shares and a full claim on our business property.
    We know that HSBC Bank has allowed certain members of is staff to commit certain criminal acts which are listed in The Theft Act 1968, The Criminal Law Act 1977, The Financial Services and Markets Act 2000, The Fraud Act 2006 and because of the way in which the Bank has conducted it’s undertaking and the way in which that has affected the lives of the family we believe that Section 3(1) Health and Safety at Work 1974 Act has been breached.
    The Police have been informed and have failed to accept that a crime has been committed, instead advising us that this is a civil matter and if we wish to take the matter further to take out civil proceedings of refer the matter to the FCA. The FCA have informed us that if there is criminally involved, it is a matter for the Police, they refuse to pass the report to the Police. We have spent more than £11,000 on civil proceedings but having run out of money in June 2016 we could not continue any longer down this route. We have made several complaints to the FOS, although we got most of the money we paid in Swap payments back they insisted that we would have taken a Cap product instead, which is contrary to what we said in December 2006 as we would have walked away from any deal with HSBC Bank.
    The only way forward is for the appointment of an independent judge supported by financial experts to look at every complaint.

  2. So few victims have won redress. Instead more victims face expensive corrupt bank lawyers and barristers to unfairly take the last of what they have.

    MPs accept bad things have and are STILL happening. Yet many victims remain on the conveyor belt into court.

    If MPs and Treasury know there are serious issues why are court cases pending not halted ASAP until econimic police white collar units have investigated banks systematic, engineered and orchestrated operations.

    Why are funds not being found (yesterday) to assist the main chap trying to do something. Anthony Stansfeld TV PCC.

    Boards of Lloyds should be pulled in ASAP for investigation.

    Action Fraud take 3 to 4 months to maybe investigate white collar crime. Why?? Yet a kid taking 2-3 items out of Poundland will see coppers there in 20 minutes. IT’s so wrong.

    I can see SME victims taking action in their own hands if powers that be font do something very very soon.

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