HBOS Reading: Independent Review

Part of the debate – in Westminster Hall at 4:55 pm on 18th December 2018.

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Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Human Rights), Shadow DUP Spokesperson (Health) 4:55 pm, 18th December 2018

I congratulate Kevin Hollinrake on securing the debate. He has been really engaging on the subject and he has been thorough in his investigation. We all appreciate his efforts. It is also a pleasure to follow Martin Whitfield, who made a valuable contribution to the debate. The hon. Members who are present are the ones who are usually present when there is a debate to do with banking. It is also good to see the Minister in his place. We have met and discussed these matters on many occasions. We have had copious correspondence—maybe enough to destroy a rainforest in Brazil or something, the letters have been so numerous. It is important that we discuss these matters and bring them forward.

I am conscious of the time, so my comments will be brief. I want to talk about the key point of the debate, which, for me, is in the final substantive paragraphs of the Minister’s letter of 3 December to the hon. Member for Thirsk and Malton. The letter states:

“From conversations, meetings, and debates over the course of my tenure, I have seen that there are a number of businesses who feel that they have not already had access to a process which can address their complaints. This is why I am glad that the banking industry propose to put in place a method of addressing unresolved historic cases. Established independently of the banking industry, and overseen by a former senior judge, the scheme to consider these cases will make decisions on a ‘fair and reasonable’ basis, be adequately resourced to deal with more complex disputes, and operate in a transparent manner. The industry have also committed to producing proposals on the implementation of the voluntary scheme for future complaints from larger businesses, and I look forward to the next steps in this work. I trust that you welcome these developments, and will continue to work constructively with UK Finance on the delivery of these schemes by September 2019.”

I have two observations on that letter, which I hope the Minister will take note of. My first observation was expressed in part of my published statement that went to The Times’ journalist James Hurley last week, on Monday 3 December, following the publication of the UK Finance report. The article states:

“The Democratic Unionist Party”— which I am privileged to be a member of, and which has been clear about where it stands—

“is among those who still believe a tribunal is needed.”

I was quoted as saying that my concerns about UK Finance’s exclusion of the tribunal were

“compounded by the legitimate concerns of many SMEs about the independence of past bank-led redress processes”.

This debate is founded on exactly that concern about the Griggs review. Many right hon. and hon. Members have already spoken, and probably will speak, here and elsewhere about the substantive evidence on that matter, including legal opinion, as referenced in The Times. I will return to that shortly.

My second observation is that the Minister clearly believes that the APPG on fair business banking and finance is being actively involved in the process of the development of these schemes with UK Finance. Page 4 of the UK Finance report states:

“UK Finance has been working with member firms, the Government and regulatory authorities to consider the proposals set out in the Walker Review and to consider how the industry can address the important issues raised.”

There seems to be an undertaking and a willingness from the Minister to do that. UK Finance refers to working with the Government, but, respectfully, that comment does not seem to underpin any active recognition or involvement of the APPG and parliamentarians in the development of the process. The hon. Member for Thirsk and Malton has put that forward clearly in his correspondence. It is my view and that of the Democratic Unionist party that it is a fundamental error to exclude parliamentarians and that it will not help the development of a sound, independent solution. So we look to the Minister to address that issue. He appears to share my view and that of many others that the APPG and other parliamentarians should be actively engaged with UK Finance in compelling a fair solution. When he responds today in this debate, I urge him to reinforce his position for the public record in Hansard.

Finally, I come to my key point. Let me put it to the Minister today that we need a decision in his response to this debate on independent redress. Will the Government fully support the involvement of a truly independent public body—the Chartered Institute of Arbitrators—as central in these voluntary redress schemes? For the DUP and—I believe—the public interest, that makes considerable sense, and should both allay SME victims’ legitimate concerns and receive public support from UK Finance, as the institute will be truly independent and competent in considering this subject matter.

The institute would be available for all the historical cases and would be an available choice for complainants in the future, where they prefer not to proceed to an ombudsman for cases below the £600,000 limit, inclusive of the maximum claim limit of £100,000 in consequential damages. So a three-person tribunal is what we are seeking. It could hear cases with an upper compensation limit of the £10 million set out in the APPG’s position statement on 14 November. That is what I would like to see and I believe that is what the hon. Members for Thirsk and Malton and for East Lothian want to see. Indeed, I believe that it is what all of us in this Chamber want to see.

I look forward to hearing the Minister’s affirmative response in support of the Chartered Institute of Arbitrators today, so that we can all—please—move forward with confidence and belief that we can actually get somewhere, and so that this particular subject of truly independent redress is finally behind all of us.

I am very conscious of some of the headlines that we have seen recently, such as “Lloyds’ compensation scheme ‘defective’”. The article continued:

“A compensation scheme set up by Lloyds Banking Group for small business owners ruined by a banking fraud has been labelled ‘defective’, based on a ‘flawed’ methodology and ‘partial’ to the bank’s interests.”

It went on to say:

“Legal advice prepared…says that…the level of compensation being paid out ‘gives rise to a real sense of injustice’.”

I will finish with a last comment. The ombudsman-led approach would ensure that small businesses were able to challenge the banks for their past mistakes, while also protecting them in the future, and without the added costs of a tribunal. That is why I believe that it would be the best approach to rebuild trust between business owners and their bankers.

I support what the hon. Member for Thirsk and Malton has put forward and I seek a positive response from the Minister; I am sure that it will be forthcoming. However, after all these years of ill-doing—for want of a better word, and I am trying to be very careful with my words—or wrongdoing against people, almost putting them to the wall in banking deals, what I want to see, and what I think our constituents want to see, is a compensation scheme that fully enables people to seek full redress for what they have lost. Those who carried out these despicable acts also deserve to be made accountable for their indiscretions and criminal behaviour.