HBOS – The Long Road To The Truth SMEs Already Knew

I am of course delighted that yet another report is out about why HBOS failed and this time from the Treasury Committee. But I am also devastated to realise that 9 years after Paul and I started our investigation into HBOS; 8 years after we started writing letters and reports to the TSC; 8 years after journalist Ian Fraser and others published some of the unwholesome truths about HBOS and; 11 years after Paul Moore blew the whistle on the risks HBOS was taking, we now have yet another report arriving at the same conclusions we arrived at years ago re HBOS and the regulators. How can it be that such blatant misconduct has taken so long to identify?

As the truth becomes more and more apparent to the public, I can’t help feeling my family and many others would not have lived through 9 years of stress, anxiety and poverty had the authorities been prepared to listen to us when we first reported HBOS to them. Not just us and not just regarding HBOS but the numerous business owners who repeatedly report misconduct in our banks but whose views and allegations are not considered by any authority as we are not deemed to be ‘professionals’ with regard to the financial sector. Meanwhile the views and comments of bankers and other so called ‘professionals’ are given full consideration and endless hearings. I have been asking for a meeting with Mr Tyrie and the TSC for years – originally to give them information about HBOS and more recently to expose the collective issues of SME Alliance members.

I was disappointed again last week to hear Andrew Bailey, the new head of the FCA, pooh pooh SME Alliance to Andrew Tyrie – and, of course, we will not get a chance to reply except by letter. So while I’m really pleased the TSC is taking a more pro-active approach to miscreant banks and ineffective regulators, I really hope that in the future the voices from the SME sector are listened to earlier because we are on the front line and when it takes 9 years to expose the truth, we are the ones who suffer the consequences.

Here’s an extract from a letter to Andrew Tyrie and the TSC dated 27th February 2014 (the main part of the letter was about HBOS Reading so it can’t be published – yet).:

…..We bring this to your attention because this seems to be the crux of the problem between banks and SMEs:

There is no appetite from the authorities to prosecute serious criminality in the financial sector and because, it would seem, the FCA Objective of “Market Confidence” overrides all the other Objectives and Principles and even the Common Law. The Banks are fully aware of this and see no reason to stop the rape and pillage of SMEs because it is so highly lucrative for them.

The endless and substantial fines levied by the FSA/FCA against the big banks, are totally ineffectual in curtailing criminal activities or misconduct. How could these fines possibly work when no one is held responsible and the shareholders pick up the bill? We would ask how, in a democratic country, a bank can break the law by laundering money for drug cartels and yet no one is to blame? Do the drug cartels pick up the phone to an anonymous voice at a call centre specifically in place for money laundering – Press 1 for drug money, 2 for tax evasion, 3 for arms deals? Or do real people in the banks negotiate these deals? As we understand it, money laundering is considered to be a very serious crime – unless, apparently, you are a banker. And if Banks can override the law of the land so successfully, what hope is there that the authorities will step in to protect small businesses? And we have seen startling evidence where HBOS have been able to manipulate the justice system to keep the Bank and its employees out of criminal trials.

We have asked, on more than one occasion, for a meeting with you Mr Tyrie. The evidence we hold (which is not all with the police or the FCA – mostly because they do not want it under their remits) is, as our friend Mr Ken Olisa has described it, a time bomb waiting to go off. And even we, who are truly disgusted by the behaviour of some senior bankers, feel we should share the evidence with someone in authority. Not least because our 6+ years of work should be used to stop financial institutions being able to set up situations like HBOS Reading or GRG. Sub judice cannot last forever. Neither can the victims of these devastating crimes against small businesses be asked to rely on authorities who repeatedly do nothing to remedy the situation. And we believe pressure should be put on both Lloyds and RBS to rectify their bad treatment of SMEs before the true facts surrounding HBOS / Lloyds Banking Group are fully exposed as a last resort. ……

..Surely the time has come when the TSC has to listen to the voices of those business owners affected. We have watched the endless TSC/PCoBS interviews with bankers like Lord Stevenson, whose performances and explanations, quite frankly, beggar belief. But we never hear the TSC interview people from the other side of the fence. We never even hear about this being done ‘in camera.’

We can assure you the FCA has no interest in talking to individuals outside of the sector; the FOS is ineffectual when it comes to SMEs and; the police take little notice of reports of criminal conduct by banks if the report comes from individual business owners. In our case, when we made allegations of criminality at HBOS to the Cambridge police in 2007, we were told we were simply ‘”collateral damage” and only the Bank could request an investigation. The Bank, of course, did not want an investigation and insisted nothing criminal had occurred. Worse still, there is nothing the banks like more than to fight allegations against them by SMEs in the Civil Courts, where their highly paid legal teams rip business owners to shreds.

So who can SME owners report to Sir? As things stand, no one. And where can they get justice? No where. Our only hope is the Court of Public Opinion – and even that is becoming an increasingly lame option because most newspaper editors are unhappy to publish anything but the most generic of banking misdemeanour’s like PPI or IRSA. They need the advertising revenues and financial support from banks and, in many cases, the interests (some might say contamination) of executives who are board members of both banks and media groups, are instrumental in blocking adverse publicity.

What we need, without doubt, is a reliable and official method of communication between business owners and Government agencies like the FCA and the TSC. This must include people with first hand knowledge of serious malpractice by banks and/or bankers. We don’t suggest every business owner with a gripe against a bank should have access to the TSC. But where major frauds are perpetrated against multiple SMEs, we believe the TSC should be willing to listen to business owners and, further more, the banks should know the TSC will listen”……

Much has been said previously about giving the FCA more powers (to do what I wonder?) – personally I would like to see the TSC have more powers to act on all the information supplied to them. Because while I’m sure the great and the good dread being grilled by the TSC, ultimately they know little will come of it and that is a terrible waste of resource, time and opportunity. The TSC should be able to take action on their findings. Alternatively and as this latest report suggests, a completely separate agency should deal with enforcement of financial regulations. Either way someone should be able to deal more effectively than the FCA with financial misconduct and/or economic crime and it should be done in a timely manner – because 9 years is a long time to wait for justice. Not that we’ve seen much justice yet.

One last thought – we’ve recently had the FCA report into HBOS, the Andrew Green QC report into the FSA’s conduct in relation to HBOS and now the Treasury Committee report on Why HBOS failed – and that’s on top of the Bank of Scotland Censure report and the PCoBS report. We have all these reports identifying failure, negligence, incompetence and whole host of other issues  – so what happens next? Anything? Will we start to see bankers really held to account – will we see bankers prosecuted where appropriate?

Or will Mr Bailey’s comments in the Telegraph 14th December 2012 suggesting we can’t apply ordinary law to bankers, still hold fast:

“…would be a very destabilising issue. It’s another version of too important to fail. Because of the confidence issue with banks, a major criminal indictment, which we haven’t seen and I’m not saying we are going to see… this is not an ordinary criminal indictment.” http://www.ianfraser.org/dear-mr-cameron-if-bankers-are-above-the-law-we-need-an-urgent-explanation/

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