Category Archives: Mediation

Save The Bank, Call In The Diplomats! Really??? #RBS

IMG_5058aBefore SME Alliance was started, I would have been hard pressed to believe any bank could behave as badly as Bank of Scotland and its keeper Lloyds Banking Group. Now I’m pretty sure RBS could give HBOS/Lloyds a run for their money in the bad banking stakes. Not a day goes by without a new nightmare story about RBS or Nat West arriving in the SME Alliance in box. Which isn’t to say HBOS/Lloyds has been knocked off my top spot but is rather, a sad reflection of how systemic malpractice is in our banks.

Consequently I don’t know whether to be shocked by the news Jacob Rees-Mogg has asked UKFI to call in the troops to get RBS out of it’s £5BN fine from the US, or whether I think he has a point? From my own point of view it’s tough enough to get RBS to compensate the many UK firms it trashed in its GRG division or it has forced into bankruptcy with exorbitant exit fees for destructive products like IRHP. In fact it’s hard enough – in the face of indisputable evidence, to get them to admit black is black. Paying £5BN to the Americans will surely make it even tougher for UK victims of RBS to get compensation? And what about shareholder (taxpayer) value? We’re already reportedly going to lose £13BN on the sale of RBS – do we have to add £5BN to that figure?

On the other hand, as the US authorities have levied this penalty for the banks sub-prime activities, should RBS, yet again, get away with no penalty? God knows why (and he’s not telling) but apparently senior bankers can’t get prosecuted for the multi billion pound scams they over see, so would it be right to use diplomatic means to curtail the US ability to fine banks as well?

I think this is quite an extraordinary conversation reported in the Telegraph today:

(UKFI) “Are you saying to the Treasury they should use the government’s diplomatic efforts with our closest ally to avoid the British taxpayer being fined $8bn by the American taxpayer?”

(Mr RM)“If I were you, I would be saying, what is the British embassy for if it is not trying to get RBS off this fine? Our closest ally fining us $8bn is pretty stiff.”

There’s a spin and a half. This suddenly isn’t about the misconduct of RBS in America and the penalty they should pay. No, this is about American taxpayers trying to fleece British taxpayers! And if the Americans don’t want to go along with this so called justified diplomacy to get RBS off the hook, what next? Call in the tanks? Really?

Leaving the American issues to one side for a moment, yesterday an article in Reuters, suggested Ross McEwan may have to admit the GRG division of the bank actually did do what many of us have been screaming from the roof top for years – it has been deliberately ruining SMEs and taking (stealing) their assets. Apparently the FCA have “got something” which is a bit of a game changer and the forthcoming report will expose this – or some of it. And this news has come out now because? In my opinion I’d say it’s because the bank is preparing us for an announcement in the near future along the lines of:

we are shocked to discover that in certain instances the allegations made about the treatment of SMEs by the GRG division may potentially have some validity. As a result of the FCA investigation we now have enough evidence to show a small number of SMEs have indeed been poorly served by the bank and we will, of course, make enquiries into what happened in these cases with a view to contacting affected parties.”

Someone who spends a lot of time investigating what goes on in RBS told me a few days ago that, in the event all the outstanding issues RBS has with SMEs were to be addressed, the bill for proper compensation would be in the region of £40BN. Of course that’s not going to happen. If politicians are kicking off at the idea RBS have to pay the US £5BN, what are the chances this Government would allow the bank to pay UK SMEs eight times that? None. The Government may not have any full proof way to stop the US getting its money but they have all sorts of ways to make sure SMEs can’t get theirs. It’s a tall order for most SMEs to even get into a Court room to progress a claim let alone take on the bank’s mighty legal teams.

All the same, I know there are some very determined people out there and some big class actions in the pipe line. With such large losses looming, George Osborne must be worried about the share sale he is so determined to achieve. That’s without even considering the debate on whether or not he should be selling RBS in the first place. I know there’s many organisations and campaign groups who feel RBS should just be nationalised and then split up into smaller banks that would at least be of some use to society. I would agree except that we’ve already lost a fortune on this bank and nothing I have seen or heard in the past 6 months convinces me of anything other than the fact RBS is heading very fast into a brick wall.

Whether the bank is sold back into the commercial world or nationalised, the barrage of allegations and litigation heading its way is not going to stop. And some of the things coming have not even been mentioned yet – in fact I don’t even know if Ross McEwan is aware of what’s coming? I’m very sure the FCA doesn’t.

I suppose another option is if Jeremy Corbyn were to become Prime Minister – he might nationalise RBS, insist no shareholders got anything and no one could could litigate against the bank? But I can’t see that going down well with anyone and least of all the bankers who might then be asked to live on a normal wage.

So what should happen to RBS? Who knows? My husband thinks (and he even said it in a meeting at 10 Downing Street) the only way forward between the banks and the SME sector is a “truth and reconciliation” scenario. It would cost a lot for the banks to come clean and work out suitable compensation for the thousands of SMEs they’ve gratuitously ruined but, were such an agreement even vaguely possible, everyone, including the SMEs would have to take a reasonable and moderate approach. And the billions of pounds the banks would save on expensive lawyers, barrister and court fees would go a long way too righting wrongs, getting the SME sector back on it’s feet and re-establishing some trust.

#RBS to sell or not to sell – won’t make any difference to the fact this bank has backed itself, the Government and the Country into a corner. And no, Mr Rees-Mogg, the British embassy is not there to protect a British Bank from the consequences of its own misconduct. The tax payers didn’t ask for the opportunity to bail RBS out and become shareholders – it was a fait accompli. As such, one would have thought our own Government, regulator’s and justice system (not to mention UKFI) would have been keen to protect the public investment and stop our bankers behaving like bandits.

One last thing – Nick Gould and I had a great meeting this week at the Metro Bank with Peter Musumeci Jr, the right hand man of Vernon Hill. I’m not saying the Metro Bank is perfect and any SME owner could waltz in there tomorrow and get exactly what it wants. However, not only would I say the ethos of the Metro Bank is refreshingly different to our big banks, they also listen and wanted to know what are the key things the SME sector is looking for in a bank. Funnily enough, a lot of what we want is contained in the FCA Principle for Business, starting with principle 1. Integrity. Sadly integrity has been off the menu in some banks for so long I can only think some of our more illustrious bankers have forgotten what it means.

Photograph © Laura Maria Photography 2015

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SME Alliance meetings at EMM Law and Metro Bank. A really brilliant day!

IMG_8976Yesterday was a double whammy for SME Alliance – we had a morning meeting sponsored by EMM law http://www.emmlegal.com/meet-the-lawyers/kate-mcmahon/ on the subject of Private Criminal prosecutions and an afternoon meeting sponsored by the Metro Bank. I didn’t attend the morning meeting (no room at the inn) so I can’t say a lot except we’ve had some really good feedback and we’d like to thank Kate McMahon and her team at Edmonds Marshall McMahon for their hospitality and for explaining how the process of Private Criminal Prosecutions works. Hopefully Andy Keats, who set the meeting up for us, will blog about it in the very near future.

The afternoon meeting at the Metro bank also went brilliantly. Derek Granville, our host, was our first speaker and he explained both the ethos of the Metro bank and the way they work. Two things in particular were music to the ears of our members. First – they don’t want to sell you financial products. So no PPI, no swaps and no other dodgy, so called, insurance. Secondly the Metro Bank is completely deposit funded and there is no wholesale funding. So they are not reliant on the ‘money market.’ Sophie took loads of notes of the whole meeting and we will post all the main points Derek made as soon as she has typed her notes up. But I can say a lot of us were very impressed with what Metro bank has to offer and it does seem like they are bringing back old fashioned banking where you know who you’re dealing with and what you’re dealing with.

IMG_9015Our second speaker was Andrew Hilderbrand http://gunnercooke.com/team/andrew-hildebrand/ who is a mediator. And whereas the word ‘mediation’ means an alternative form of bank bullying to some of our members, Andrew very eloquently put the case for positive mediation. As many members pointed out, it’s not always the case you can get a bank to consider positive mediation as they’re used to having everything on their terms. However, tying this in with our report to Andrea Leadsom where we suggested ‘FOS Plus’ would require banks and clients to ‘mediate’ early on in the process of dispute resolution, Andrew’s brand of very successful mediation would work very well. Will blog in more detail soon – or better still I’ll ask Andrew to blog.

Our last speaker was Lindsay Whitelaw from Urica. This company offers a very different type of factoring. I have never thought much about factoring except when people call to talk about Bibby (which they often do) but what Urica is offering sounds very different and very positive. The difference with ordinary factoring is Urica requires no personal guarantees and only checks the credit worthiness of the creditor. Anyone who uses factoring services should check Urica out: https://urica.com/ As their website says – “It’s not invoice discounting because that’s just debt by another name.” So it’s an interesting concept and a very new business model.

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Overall it was a great meeting with many new faces including people I’ve been talking to for years about HBOS, Lloyds, bank fraud, SME issues, but I’ve never met. And both Jon and Nick invited some interesting guests. But as always it was really great to see all of our founder members there. I know some people came from Scotland, Wales, the West Country and the North of England. Thank you all for making the effort to travel so far to join us. And thanks also to the two new members who felt it was so positive they have offered to sponsor us.

I will blog again over Easter in more detail but, if I don’t get another blog out before Easter Friday, Happy Easter to all and many thanks for your support. Who would have thought we could achieve so much in such a short time???

p.s I don’t know what time everyone left the Shakespeare’s Head where networking was still going strong when the Turner crew left about 7.00pm but I’m guessing Weatherspoons like SME Alliance!