Letter to APPG – follow-up BBRS, HBOS from Chris Parry
TO: Rt. Honourable Kevin Hollinrake MP, Co-Chair of the APPG on Fair Business Banking
FROM: Chris Parry-Davies (formerly of The Media Centre group) 13 January 2021
Further to our earlier correspondence, thank you for copying me in on your APPG notice of 5 January 2021 (in turn as per your letter to the FCA). This has prompted me come back to you with a number of concerns, which I hopefully make as my usual well grounded, reasoned, sensible points.
Lloyds Impaired Assets Office
As I and the small group of victims I sometimes speak for are all HBOS IAO victims, the strong statement made by the SMCR complaint to the FCA over Lloyds’ liability evading conduct, even now, is much appreciated. As you say this covers almost every facet of LBG’s ongoing conduct:-
- There are immediate issues with hardship support, ex gratia payments and debt relief etc, particularly in view of the whole process taking so long.
Here LBG really needs to make a further round of ex-gratia payments. Granted it made such payments in December 2019 but this was on the basis the Foskett Panel would deal with cases in 2020. The pandemic has caused some delay but in reality this has had far more to with LBG continuing to limit eligibility and contrive to manipulated definitions and remits (as per 2 & 3). Indeed, in many cases the delay and pandemic have compounded each other (for example, taking time out to prepare cases having then reduced pandemic self-employment support).
As such, while obviously urging the APPG to champion it, I’d also welcome any advice on how we press for this.
- LBG continues to restrict eligibility, definitions and remits to evade legitimate claims and liability. Just as with the HBOS IAR Review (and Griggs’ review of it), the Cranston Review and the Dobbs Review, LBG is currently boxing in the Foskett Panel with the remit and definition of IAO Fraud.
Here, while fully agreeing the Foskett Panel now has the procedural tools it needs, it is still being prejudicially constrained by the definitions and remit which have been dictated by LBG to deliberately restrict eligibility and limit its liability regardless of the strength and truth of the allegations.
It would certainly help here if the APPG could, make the Foskett Panel fully aware of LBG’s long history of definitional and remit contrivance over these abuses and, secondly, press the Panel, as its being urged to do, to take the requirements to provide ‘fair, proper and generous’ review and redress as overriding such definitional constrictions.
- This in turn reflects LBG continuing with the ongoing wider evasion of liability first initiated by HBOS by boxing in and reductively reducing everything to just the frauds by those convicted (indeed just QCS) at just the Reading office (with it only the Cranston Review adding back Bishopsgate) and nothing to do with anyone else at the IAO, let alone BOS – where the record shows all this is simply contrivance and manoeuvring from beginning to end.
Apart from coming back to ensuring the Foskett Panel is fully alert to these manipulations (as in 2.), this now overlaps with the Dobbs Review; which was also boxed in by its LBG dictated remit and definitions yet I believe reaching adverse conclusions – but now delayed as a result. Any adverse findings by Dame Linda can only affect these issues; will necessarily, as it were, break open the definitional boxing in and contrivance to some yet unknown degree.
The problem is the Foskett Panel cases are going ahead before Dame Linda will provide here final report, despite the direct overlap in the issues (but no one would argue the Foskett Panel should be further delayed to await her report). Meanwhile LBG will only commit to that they ‘will once Dame Linda has reported review whether cases are affected on a case by case basis’; which we all know means it will doge and weave again in deciding their own liability.
As a result Dame Linda is being urged by a number of people to, firstly, provide some kind of interim indication of the tenor of her findings and, regardless, make known to the Foskett Panel as much as possible about her findings so far to inform the Panel in their review of cases (particularly over causation, the definition of IAO Fraud and consideration of fraudulent practices involving or by others at least at the IAO Reading-Bishopsgate unit).
Again it would be very helpful if the APPG would support pressing this on Dame Linda and the Foskett Panel
Business Banking Resolution Service
There is considerable concern across the spectrum of victims of all the various business banking abuses, various victim and SME representative bodies and SME businesses generally at the BBRS going live as presently constituted. This includes that the BBRS as it stands is not a ‘step in the right direction’ in the sense of either being fit for purpose or as the herald or start of something which can/will then progress further.
Despite the window dressing and sound way of operating, the BBRS has been established in a way and on the basis of rules which defeats its essential purpose; makes it the very opposite of what it purports to be.
Together the business size limits, the ineligibility criteria, lack of substantive grounds of complaint and the size of awards, it will fail to provide the proper, adequate redress it is meant to for at least 85%+ of the historical cases and future cases when the same or similar abuses recur; as they now inevitably will. Rather the BBRS is diverted and reduced to an, but to that extent useful adjunct to the Financial Ombudsman; dealing with largely same smaller cases and victims, while all the rest are left with no more redress than they didn’t have before. Please see the attached summary.
Far from being the start of something, the BBRS is in turn being used by the banks and Treasury to finally thwart and slam the door shut on any meaningful reform as result of and proper redress for victims of the repeated, multiple business banking abuses. Problem now dealt with is already the line, while in reality the earlier status quo which both provided fertile ground for abuse and then denied the victims redress has been reasserted in every respect.
Critically, this is the one-sided exploitative context in which already reeling businesses – those the country is depending on to revive the economy – will be dealt with by the banks as the pandemic’s economic aftermath hits home. Yet the banks with repeated proven form in exploiting SME businesses, including widespread fraud, are here being given the green light to continue doing so and then no more than nominally held to account when they do.
Obviously you are well aware of much of this. Repeating it here is to underscore how serious and widespread among victims and SMEs these concerns are. The all but universal view is that the BBRS should not as it is be signed off as fit for purpose, rather returned to the drawing board (without the, as you say, banks’ excessive influence on its rules and eligibility). Indeed, as it stands is a betrayal of all victims and SME businesses; yet if signed off will be all but impossible to then change while being used as the pretext to block anything and everything else.
Here concerted efforts are afoot to object to and try to prevent the BBRS going ahead as is. It would clearly be useful to know where you/the APPG might stand if this was challenged in Parliament?
Grounds and standards of conduct
In pressing for Model Litigant Principles you put your finger on the lack of applicable grounds and standards at the heart of all SME/business banking in the UK; particularly, as you say, business banking remains not a ‘regulated activity’.
I and I believe many others fully support and appreciate the APPG pressing for the adoption of Model Litigant Principles. But as MLP is largely just procedural – about how the banks conduct complaints/cases – but the problem about the lack of substantive grounds as well as fair process, it is not enough in itself; also needs the other substantive side as well.
Here (ironically) the BBRS illustrates. Its procedure at least certainly reaches towards MLP (subject to it being entirely voluntary on the part of the banks) but it still has no actual substantive standards of conduct banks can be held to account against while business banking remains an unregulated activity. Even assuming the victim/business is eligible, there is a vacuum of substantive grounds cases can be brought for.
All the BBRS has other than overtly criminal conduct (which is difficult to prove and the police won’t investigate) is conduct which is not ‘fair and reasonable’. But in the absence of specific grounds/standards of conduct this can attach to, it can only (as any lawyer can confirm) be applied in the negative as not something any fair or reasonable bank in the same unregulated circumstances would do (which is obviously that much lower standard and easier to escape from).
Clearly the best way to resolve this would be for business banking to become a regulated activity subject to appropriate standards of conduct. But at the moment this is probably a forlorn hope. It might, however, be possible to address this on lower key more standalone basis by requiring banks to adopt a business banking standard of conduct modelled on an existing proven standard from another sector (for instance the FCA standards for commercial insurance would be pretty good but there are others). And might tactically be positioned to make it difficult for the banks to resist.
The SWAPs abuses
Last but not least, the SWAPs (IRHP) abuses are now the least properly addressed and inadequately resolved of all the business banking scandals, leaving the victims worst served and most denied full and proper redress – which I say as the victim of another of scandals where LBG have so far evaded for now 17 years!
Both financially and in terms of the number of victims this was the largest of the abuses. The FSA identified 32,000 SMEs (mis)sold 38,000 IRHPs with restitution originally estimated to be well in excess of £10 billion. But this is before taking into account the 60,000 SMEs (mis)sold Tailored Business Loans (TBLs) which included hidden Swap or similar instruments.
The abuses were demonstrably systemic and organised in such a way that it cannot possibly have been just overzealous mis-selling and/or a rogue department. Yet the banks have been allowed to get away with even more of their usual disingenuous evasiveness and contrivance to avoid liability; aided and abetted by the technical complexities and abrogation of regulatory responsibility by the FCA over such financial products as well as business banking generally.
Meanwhile, like the victims of the other scandals, IRHP/TBL victims still have no effective means of redress. The vast majority are ineligible under the BBRS rules, usually multiple ways round. This includes SME businesses previously made ineligible for the FCA IRHP scheme as a result of the retrospective introduction of illegitimate sophistication criteria. Equally, many are ineligible under the business size criteria (and precisely why the banks have insisted on these being set so low and then required the business to be under all, not just one of the criteria).
In short it is the SWAPs abuses which remain the worst, least resolved of the scandals and most in need of championing.
Anyway I have hopefully succeeded in at least giving you food for thought. Regardless thank you for all your ongoing efforts on behalf victims and businesses generally.