A British member of parliament (MP) is calling for the creation of a special tribunal to tackle bankers’ mistreatment of small- and medium-sized businesses (SMBs) in the U.K., reports in the Yorkshire Post said Monday (Jan. 8).
Kevin Hollinrake, MP and vice chairman of the All Party Parliamentary Group for Fair Business Banking, called out large financial institutions (FIs) for misconduct against their SMB clients, noting that mistreatment often goes unchecked because SMBs lack the resources they need to fight back.
“In my own experience, banks generally treat businesses fairly and reasonably,” Hollinrake said in a statement. “However, recent high-profile business banking scandals at RBS and Lloyds/HBS have highlighted clear contraventions to the Financial Conduct Authority’s regulatory requirement that banks pay due regard to the interests of its customers and treat them fairly.”
Hollinrake, the Conservative MP for Thirsk and Maltron, offered support for a report generated by British businessman Lawrence Tomlinson when he served as Business Secretary in 2014. The report detailed allegations against Royal Bank of Scotland (RBS), claiming the FI deliberately and systematically mistreated SMB customers for its own gain.
“The report that followed revealed the systematic mistreatment of small firms in their rescue division,” said Hollinrake, citing RBS’s Global Restructuring Group, which allegedly pushed some SMBs into financial turmoil despite being designed to aid businesses struggling to repay loans. “The trouble is that there is no effective means to redress for the mistreated — not only are banks too big to fail, [but] for most of us, they are also too wealthy to sue.”
The MP also cited common complaints regarding the Interest Rate Hedging Product, which is “ultimately deemed to have been ill-designed and missold by the FCA and the bank’s own redress process, but, incredibly, they will only refund the costs of the loan and refuse to compensate you for the consequential loss of your life’s work: your business.”