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Banking News & UK Comment 2012


Banks are 'too big to prosecute', says FSA's Andrew Bailey - Andrew Bailey’s comments come days after HSBC’s record $1.9bn (£1.2bn) settlement with the US authorities over money-laundering linked to drug-trafficking. US assistant attorney general Lanny Breuer said of the decision not to prosecute: “In this day and age we have to evaluate that innocent people will face very big consequences if you make a decision.”

An interesting insight into Mr Bailey’s career and how he thinks - With Mr Bailey in charge, the PRA will be arguably more powerful than the FSA ever was, but he insists his approach will be based more on focus and less on fear.

Open letter to David Cameron - 17 December 2012

Eddy Weatherill comment: Unless those in the banks and particularly those in charge of banks are brought under the same laws as an ordinary person banks will continue to commit financial crimes against all those that use banks. UK Businesses have been forced to their knees by UK banks – many would not have failed had it not been for the bank’s own excesses created out of the lack of regulation and failure by successive governments to legislate and enforce legislation whilst also preventing use of existing laws of this country being applied to banks and bankers.

Mr Bailey’s comments are both truthful and frightening because he is stating what we all already know is the truth. Banks and particularly bankers are not being prosecuted for crimes committed against the public and those who should have been prosecuted remain untouched and are like rotten apples - left in the banking barrel to infect the rest. But, IBAS's 20 years of banking experience suggests that when banks do not fear the regulatory process or prosecution – they remain unchanged. However, the general public has been changed by what they have seen and also what they have now experienced because of bank excesses.

This country is now heading for anarchy if government and regulators cannot establish the way to ‘show’ the UK public that banks and individual bankers who lie and cheat and adopt fraudulent tactics to cheat customer’s of both money and assets will be prosecuted to the full effect of UK law. Giving bankers a ‘slap on the wrists’ or giving banks a large fine (which bank customer’s will end up paying by increased fees and charges) is not enough to correct this contradiction in moral standards between the prosecution of ordinary UK citizens and the lack of it where banks and greedy bankers are concerned.

The ‘way’ has to be found to ‘show’ the UK public that banks and individual bankers who lie and cheat will be prosecuted because the alternative route into anarchy is too awful to contemplate. - 17 December 2012

Banks ordered to pay compensation to swap mis-selling victims Banks face a raft of new claims over interest rate swap 'mis-selling' after the Financial Ombudsman Service overturned two of its earlier verdicts and ordered lenders to pay compensation to victims. Banks could face thousands of new claims from small businesses over 'mis-sold' interest rate swaps after a reversal by the Financial Ombudsman Service of two decisions not to award compensation to victims. Banks, including all of Britain ’s major high street lenders, could now be hit with a flurry of claims that could potentially costs them millions - after the surprise FOS judgements.

In findings published this week, two unnamed banks were ordered to pay hundreds of thousands of pounds in compensation to two customers 'mis-sold' interest rate swaps. Identified only as 'Bank E’ and 'Bank S’, the lenders, understood to be two of the country’s leading high street banks, were accused of putting their own profits ahead of the customers’ interests in selling them interest rate swaps that ended up crippling the businesses. In a judgement involving an unnamed hotelier identified as 'Family W’ the ombudsman official said 'Bank E’ had sold swap “primarily for the bank’s commercial convenience and with little or no attention to the needs of its client”. His findings in both cases overturn original verdicts in the banks’ favour and raise the prospect of a flood of new cases from the thousands of businesses sold interest rate swaps.

In the case of 'Family W’ against 'Bank E’, the new FOS verdict recommends the lender pay compensation to the hotelier that could cost it more than £500,000. Giving evidence to the Treasury Select Committee yesterday, Sir Donald Cruickshank, who has carried out several reviews into the banking industry for previous governments, said the recent Libor-rigging scandal represented only the “tip of the iceberg” of the problems facing lenders. The FSA currently estimates more than 40,000 swaps have been sold to SMEs - Daily Telegraph 25.10.12

Banks face thousands more rate swap mis-selling claims after Clydesdale and Yorkshire banks widen review. Banks could face tens of thousands of new claims over the 'mis-sale' of complex interest rate derivatives to small businesses, after a decision by Clydesdale and Yorkshire banks to widen the products on which they will consider paying out compensation. In a circular seen by  The Daily Telegraph, jointly-owned Clydesdale and Yorkshire told customers they would look at the sale of fixed-rate loans to small businesses as part of the current industry review into the 'mis-sale' of interest rate swap. They said the review would now take in "the sales of certain TBL [tailored business loans] products", in a move that will put the pressure on other banks to take similar steps.

More than 40,000 interest rate swaps are estimated to have been sold to small businesses, according to the Financial Services Authority.

Including fixed-rate loans products could easily double this number, according to derivatives experts, and enormously increase the potential compensation cost to banks. "If fixed-rate loans become part of the official review then this will massively increase the potential compensation bill for the banks," said one industry observer. The fact sheet sent out by Clydesdale and Yorkshire  identifies 11 separate loans that contain features that mean they could have been ‘mis-sold’, of which five would fit the FSA definition of products that banks have now been barred from selling to small businesses. - Daily Telegraph 21.10.12

Eddy Weatherill comment: It's good to know that Don Cruickshank (now Sir Donald Cruickshank) is still providing his input to Government - see his evidence session also see his recent comment - He wants a specific competition authority for the financial sector, with the power to implement its own rulings. He told the committee that because of its special role in transmitting money through the economy, the banking system should be considered as effectively part of the state and regulated accordingly. "This sector demands, for security, efficiency and prosperity, invasive and harsh regulation, and if those who enter the industry say that it's unfair, well they can go off and do something else," he said.

IBAS would totally agree with Sir Donald Cruickshank - because movement of money remains the biggest barrier to competition and remains a bastion of banking control/s over not only who can compete but also in the fixing of transmission costs. That limits competition unfairly. It should be noted that if the Government of the day (in 2000) had implemented Cruickshank's final report properly (or at all) instead of 'side lining' the majority of it - we might have prevented the economic chaos we have now faced since 2007/2008 - which we all continue to pay for by increased costs, lack of jobs, lack of opportunities, lower pensions, lack of health care (the list is endless) - that is and was due to bankers and nobody should forget it!

On the note of economic chaos - when banks initiated very complex derivative rate swap agreements to sell businesses, which was purely to increase bank profits, whilst ruining many businesses in the process. A matter which we would call theft from small and medium sized businesses because it was no accident and the bank's involved had no intention of giving the money back. It is a 'breath of fresh air' to me, to now see the Financial Ombudsman Service acting with more authority and correctly in not evading this issue or by attempting to put these cases into court (or by agreeing with the banks that is where they should be heard). It is good news because banks have been able to use courts to outspend and outwait customers in a strategy that has worked for them for many years. The court system and bank experience in using (or abusing) it, has allowed banks to 'invent' and also hide evidence - whilst obtaining or maneuvering into place judges more suitable for their argument and to obtain judgments for the bank's benefit. That banking strategy has protected banking from the very necessary change to rid this industry of corruption and conspiracy. In my mind any change which means that banks do not control their own destiny also provides us with some hope that in the future we might end up with a trustworthy financial sector and rid the corruption and conspiracy within it. Should we know which banks these are? I beleive we should - as naming the banks involved should be part of the consequence of such corrupt actions.

Barclays sets aside £700m more to cover PPI claims - Barclays has set aside extra money to cover claims for mis-sold payment protection insurance (PPI). The extra money takes Barclays' provisions for PPI mis-selling to £2bn and takes the total amount set aside across the industry to more than £10bn. It means Barclays has made the second biggest provision, behind Lloyds Banking Group, which has set aside £4.275bn – BBC News Business 18th October 2012 -  Eddy Weatherill comment: IBAS original estimate on PPI compensation was £10bn - that figure has now been exceeded as a 'provision' to allow banks to pay PPI claims. Once again the banking industry PR machine (the BBA resisted PPI claims relentlessly) is shown for what it is!

Branson eyes RBS bargain: After £1.65bn deal collapses, tycoon could bid just £650m for 316 branches - Sources said Virgin Money, which tabled a bid in 2010 but lost out to the Spanish bank, would be ‘very interested if the price is right’. It is thought the Branson company has a price tag of around £650million in mind, far less than the £1.65billion Santander had been willing to pay and only half the ‘book value’ RBS places on the business. RBS is 83 per cent owned by the taxpayer after a £45billion bailout. Yesterday consumer groups expressed fears that taxpayers could lose out if the branches, along with 1.8million personal and small business customers, are offloaded to Virgin Money. Eddy Weatherill, of the Independent Banking Advisory Service, said: ‘I would have concerns about this because the UK taxpayer is already in for a substantial amount of money on RBS and we could come out of it with a big loss. ‘You can’t blame Branson for trying it on as he is an entrepreneur with an eye for opportunities. But, I don’t trust a system that allows entrepreneurs to feather their nest' and ‘In government they don’t seem capable of getting a good deal for the taxpayer. That is the problem. It would have to be watched very, very carefully' and 'If Branson is the only bidder, he will pare down the price to the bone. He is not stupid.’ Virgin Money took over the ‘good bank’ part of Northern Rock in January in a deal that has lost the taxpayer between £175million and £289million, according to watchdog the National Audit Office. It now has 75 branches and 4million savings and mortgage customers. However, it has only 100,000 current account customers - Daily Mail 15th October 2012 - Eddy Weatherill comment: Now that the Santander deal has fallen through, our major concern is whether a sale of 316 RBS branches to Richard Branson at the price attributed as being his suggested purchase price would provide the correct level of funds in return for the government bail out of this bank. Whilst it appears doubtful that Santander would have actually completed on the 'deal' (without renegotiating the price to a lower figure) the sale price to be feasible now also needs to be considerably above the figure now being quoted. As, losing £1billion off the original sale price would be a very one sided deal.

New UK "business bank" is being set up to boost lending to small and medium-sized firms, Business Secretary Vince Cable has announced. The plan, billed by the Lib Dems as a "big win" for Mr Cable, will see £1bn of taxpayers' money chanelled into the new initiative. The Treasury has given its backing to the move in which a new arms-length institution will aim to open up £10bn of finance. The state cash, which it is hoped will be matched or exceeded by private money, will come from existing budgets and will not require extra borrowing. But details about where the money will come from and precise details about the bank will not be made public until the Autumn Statement on December 5. Run professionally and at arms-length from Whitehall, it will not lend directly but act as a wholesale institution funding via small new banks and "non-bank" bodies. Aides say it has been deliberately designed not to appeal to the high street banking giants in the hope it will promote competition in the sector - Sky Business News 24th September 2012

Eddy Weatherill comment: Well done, Dr Cable. The 'devil is in the detail' and we will not see much detail until December 5th - but at least it is a start in the right direction and along the right road. The big bank stranglehold on lending to (or not providing lending to) small and medium businesses must be broken. The current banking system does not encourage those who are in business for the longer term. The UK needs stronger and better strategy to promote long term businesses and also hold onto the many good business ideas past the innovation period. Short termism is not good for UK Business promotion and in the areas where Vince Cable has specifically outlined: "vehicles, aerospace, life sciences and creative industries and our world-class scientists and universities." - a long term plan is essential to harvest the ideas, technical knowledge and innovation at a faster pace instead of losing UK ideas and IP to overseas competitors with instant funding.

Appeals work - small firms overturn 40% of bank loan rejection - figures from the latest quarterly SME finance monitor from the BBA show that, since January 2010, banks have turned away 49% of new small business loan and overdraft applicants — and overall just a third of new applicants have received the finance they needed. Phil Orford, chief executive of the FPB, said: "As of May 2012, almost 40% of lending appeals had been completely overturned – or 2,177 small businesses initially denied finance – but this is clearly just the tip of the iceberg of business owners who believe their banks have unreasonably turned them down for finance. It is important to shout from the rooftops that there is an appeals process, that it works, and that small businesses who feel aggrieved should use it." - Startupdonut 7th September 2012

IBAS Comment: We would agree - anyone turned down for a business loan by their bank should appeal. We also suggest for good measure that everyone who has been rejected should also make sure their MP is copied in on their letter and any appeals to the bank. It is an absolute disgrace that not enough has been done to protect business from the banks. MPs should be made aware just how difficult banks are making life for business customers to trade and also survive. MPs should also be made aware of just how many obstacles and extra cost burdens the banks inflict on businesses as they suck their business dry.

Big jump in UK bank complaints. Complaints at embattled Barclays in the first half of this year were up 76% on the same period in 2011. Royal Bank of Scotland had 128% more complaints.The complaints include those for the mis-selling of payment protection insurance (PPI). Banks are required by regulators to publish their figures twice a year. The BBC's chief economics correspondent Hugh Pym said that aggressive claims management firms may have skewed the figures. "The figures serve to illustrate the continuing challenge faced by all High Street banks in rebuilding customer relations," he commented. Many banks, building societies and consumer groups have criticised the claims industry. - 31st August 2012 - BBC News

Eddy Weatherill comment: The banks can hardly complain about aggressive claims companies acting for bank customers by reclaiming dishonestly taken PPI payments - because PPI was the result of aggressive bank sales of a product only designed for bank gain and intended to rip off millions of their loyal customers. The result of the PPI banker's theft has changed the landscape of banking and the meaning of trust. What the banks have done successfully over two decades - is to ruin their own industry. But more importantly they have now also alienated their customer base and destroyed the trust built up over successive generations. Bank Loyalty is now the casualty. In the past banks relied upon their customer's apathy and it was that loyalty which allowed the banks to continue to rip off existing customers - by selling them rip off products. We believe that era is now coming quickly to an end - as customers 'see' banks in their true 'light'. Building trust from the ashes will not be easy because the Banks have themselves provided opportunity for many new entrants and participants to provide customers with better and more social products. It will be those new entrants providing more social products and services that will inevitably change the existing world of banking and erode the bank's share in the market. Hopefully, the banking stranglehold and monopoly on funding of business customers will soon be broken by new and innovative methods of funding now starting to be seen - which can only grow. There is certainly the need for it.

Creating a business bank is the bold move needed for growth - As the denizens of Whitehall and Westminster continue to puzzle over Britain's rocky growth trajectory, they would do well to listen to the rising chorus coming from businesses across the land The case for a business bank grows clearer with each passing day. Although many companies say their order books are full and they need financing in order to fulfil customers' requests, the overall stock of lending to small- and medium-sized firms continues to shrink. "A British business bank would act as a first port of call for businesses seeking finance," said Longworth. "Working closely with high street banks, alternative lenders, sources of equity finance and others, it would ensure that most businesses actually get the working capital they need. It would only lend directly to young or high-growth companies unable to obtain finance through the commercial banking system."Business banks work well in other countries, adds Longworth. "If a business bank is good enough for the USA , South Korea , and our neighbours in Germany , why not here in the UK ? One can only surmise that a lack of will, rather than a lack of capability, is holding Britain back from creating a business bank of its own." - by John Longworth, Director General of the British Chambers of Commerce - Daily Telegraph 27 Aug 2012

Eddy Weatherill comments on a new business bank for the UK: UK Business needs lending and also knowledgeable and useful support which is compatible with their long term business ambition - not bank lending intended to provide banks with get rich quick profit. IBAS has for many years continued to argue that banks do not and will not provide all that is required to grow UK business. That comment is particularly evident where UK small to medium business is concerned. In that specific area Banks can no longer be trusted or relied upon to provide what is an essential service to UK businesses - lending. The time for supporting banks at any cost has passed and we doubt that anybody other than banks and bankers would attempt to suggest they are irreplaceable when judged on social economics and their past history of negative and disreputable conduct. UK businesses deserve the very best support and the last 5 years has proved that banks cannot and will not provide that support at a cost which is affordable, neither will banks provide the necessary ongoing and stable environment necessary to grow UK business – instead of holding them back, whilst at the same time ‘fleecing’ them - which bankers have continued to do. Entrepreneurs and UK business should not be a ‘feeding ground’ for escalating bank profits or for banks to plunder owner’s assets when the banks decide the time is ripe for their banking ‘harvest’ or because the bank’s need short term profit for their own benefit. Politicians should be hearing the ‘noise’ from business that is building day on day – now is the time – give us a business bank.

Britain ignores this epidemic of financial crime at its peril - Rowan Bosworth-Davies states that: “ The most prestigious names in British banking and finance routinely engage in criminal activities on a scale that would make any Mafia family proud.” IBAS Comment: After 20 years of investigating business banking cases we would agree. Banks have manipulated the ‘system’ to their advantage for far too long and businesses and those who owned them have been destroyed due to bank's deliberate and dishonest profit making swindles. Mis-selling is not what this is about - it is about banks targeting UK bank consumers and engaging in theft on a very large scale - Ian Fraser - August 14th 2012

The head of digital fraud and security at Lloyds Banking Group has admitted stealing almost £2.5m from the firm she was hired to protect. - Fifty-year-old Jessica Harper, from Croydon, pleaded guilty to fraud and money laundering at Southwark Crown Court. Harper had been employed at Lloyds since 2000 and began submitting false invoices in December 2007. The court heard that over the next four years she fraudulently took a total of £2.46m from her employers. Harper began to defraud Lloyds just months before the taxpayer was forced to stump up £20bn for a rescue package for the troubled bank. - Sky Business News 7th August 2012 IBAS Comment: More bad news for LTSB as this case evidences some very serious and extremely embarrassing internal security issues over a period of years.

Standard Chartered shares plunge on laundering charges - Shares of Standard Chartered have tumbled despite the bank denying allegations that it illegally "schemed" with Iran to launder money. Shares were down 20% by lunchtime in London , after falling 16% in Hong Kong . The New York State Department of Financial Services said  the UK-based bank laundered as much as $250bn (£161bn) over nearly a decade. It said the bank hid transactions for "Iranian financial institutions" that were subject to US economic sanctions. The regulator said that Standard Chartered had hidden 60,000 such secret transactions. However, the bank denied the allegations, saying  that it "strongly rejects the position or portrayal of facts as set out in the order" issued by the regulator. The US regulator labelled UK-based Standard Chartered a "rogue institution" and ordered the bank to "explain these apparent violations of law" from 2001 to 2010. It accused Standard Chartered of falsifying payment directions by stripping the message of unwanted data that showed the clients were Iranian, replacing it with false entries. "It provided step-by-step, wire-stripping instructions for any payment messages containing information that would identify Iranian clients," the complaint said. The regulator also said that it would hold a formal hearing over the "assessment of monetary penalties". The bank, which currently only operates in the US in New York , has also been threatened with having its New York banking licence revoked. - BBC News Business   7th August 2012 IBAS Comment: Serious charges and serious repercussions but much too early to say how this story will end but this most recent revelation does not build confidence in UK banking - where the issues of lack of integrity, greed and dishonesty already appear to fuel issue after issue.

RBS confirms it Sacked Staff over Libor Rigging Scandal State-controlled Royal Bank of Scotland said on Friday it has dismissed employees over an interest rate rigging scandal, but gave no indication of whether it would reach a settlement soon with investigating authorities. "I think that the regulators must decide how they want to deal with the situation," Hester told reporters on a conference call. He added that he believed the Libor issue had been a result of "wrongdoing by individuals" rather than a "systemic problem" within the industry. New details from court documents and sources suggest that groups of traders working at three major European banks, including RBS were heavily involved. Tan, the former head of delta trading for RBS in Singapore , was fired in November for allegedly trying to influence the banks' rate setters improperly. He is suing RBS for unfair dismissal, alleging the practice of traders providing input to rate setters was widely known among senior managers at the bank. – Regulation compliance Reuters - 3rd August 2012 IBAS Comment: How many times are individuals blamed when the banks get caught? Which individuals are really to blame for a culture of greed and double dealing? It seems to IBAS from watching banks operate over the last 20 years that the ‘vulture culture’ of greed and dishonesty is a systemic problem which starts at the top and then filters down – not the other way around. But, it is much easier to fire the smaller ‘fish’ and make them scapegoats – whilst the larger and more ‘rotten apples’ stay in the ‘barrel’ - that seems to be how the ‘system’ has survived so long.

Court rejects Barclays move to delay Libor test case - Barclays has failed in an attempt to delay a legal claim over allegations it mis-sold an interest rate swap to a care home operator. Barclays is facing its first court battle over Libor-rigging allegations after losing an attempt to have a case delayed over claims it mis-sold an interest rate hedge to a business customer. Judge Simon Brown QC yesterday rejected Barclays’ move to have a mis-selling claim brought by care home operator Guardian Care Homes pushed back and ordered the bank to file a defence by the end of next week. Mr Brown said Barclays request to have the case delayed until Guardian’s claim had been investigated as part of a Financial Services Authority compensation scheme was an “impossible argument”. “We just do not know if the scheme [the FSA compensation process] will include the claimants, or even know who is a skilled person. Some cases need to be litigated and I have a duty decide which,” said Mr Brown. The Guardian claim, which is being heard at Birmingham Mercantile Court, is seen as an important test case for the thousands of businesses that are thought to have potentially been mis-sold complex interest rate derivatives by banks, including HSBC, Lloyds and Royal Bank of Scotland, as well as Barclays. “ To say that the FSA redress scheme is in a position to provide us with fair justice is laughable and I am delighted the court has recognised that,” said Gary Hartland, chief executive of Guardian Care Homes. – Daily Telegraph Finance 3rd August 2012

IBAS Comment: Let’s hope Judge Simon Brown QC sees through any other ‘tricks’ that the bank will inevitably use - legal or otherwise. However, it is still only round one in what will be a heavyweight contest and in any legal matter banks are known to ‘manipulate’ the system whenever and however possible. The businesses involved need to be aware of the ‘dirty tricks’ and how hard the banks work to keep hold of their ill gotten gains. The FSA and the banks inevitably want time to ‘wait out’ those cases that they can and to force others into insolvency, whilst the banks ultimately have their ‘legal agreements’ to rely upon. It appears there is still plenty of protection for bankers - as the FSA quite obviously seeks to ‘water down’ the issue (and the cost). The biggest question of all is still - where exactly does the FSA ‘sit’ and exactly why do they not do what they are paid to do?

RBS boss admits banks became 'detached from society' - Banks became "detached from society" and still need to reconnect with their customers, the chief executive of Royal Bank of Scotland (RBS) has admitted. In an interview with the BBC's Today programme, Stephen Hester said the industry was "coming down to earth with a bump" following recent scandals. He added that the UK could not afford "blasting it to smithereens" because of the vital role banks played. However, he also said further problems at the banks may be discovered. Mr Hester was speaking after RBS reported a half-year loss of £1.5bn. "It is very clear to me," he said. "A successful business must be built off the back of serving customers well, and until we as an industry can say we are doing that, we won't have finished the changes we need to make." – BBC Business news - 3rd August 2012

IBAS Comment: ‘Detached’ is not correct - more like totally removed from society. More problems are certain (assuming the FSA even partially does their job). Whilst banks are so removed from society and the reality of their actions and leave the rest of the community to clear up the economic mess they created and also after 5 years of ‘fall out’ and the social consequences of bankers greed - to say that (with regards to putting customers first): ‘until we as an industry can say we are doing that’ - has missed the point – it is no longer what they say that matters any more – after the last 5 years nobody can or will believe what bankers ‘say’ and certainly not what the BBA say because they are no longer credible. It is what bankers do that matters. Whilst they still destroy small business by refusing to lend at reasonable prices and destroy thousands of jobs, their social worth and value in our community decreases by the day. Everyone is now seeking a more social and more valuable alternative for our community.

HBOS whistleblower hits out at bank regulators - Among the most vocal is the man who became known as the HBOS whistleblower."The people of this country are totally fed up and angry with the continuous greed, dishonesty and wrongdoing of our banks," says Paul Moore, who was head of group regulatory risk at the bank until 2004.He is calling for "the fullest, most forensic, most transparent 'people's public inquiry'" into the behaviour of banks. - 2nd August 2012 BBC Business News

IBAS Comment: Mr Moore says: ‘there are numerous reasons for the failure of regulators - the Bank of England and the Financial Services Authority (FSA) - to hold people to account. There has been inadequate investment in investigation and enforcement resources,’ according to Mr Moore. Moreover there has been "no will and energy" to hold people to account. "Regulators and enforcement agencies are too cosy with the firms they supervise," he says. "There are loads of revolving doors between the regulators and the regulated." Plus, he says, there have been no personal consequences for wrong doing - no jail, fines, public censure or banning - so, therefore no deterrents.

IBAS has been saying exactly the same for many years and we endorse what Mr Moore is saying - because we are aware from 20 years experiences that the lack of regulation and inaction has meant many thousands of small and medium sized businesses have been forced into failure by bank excesses and legalized bullying - which the regulators are even now allowing to continue as more SMEs are forced into failure.

Eddy Weatherill has stated many times over many years that we already have the legal framework and regulation to regulate and enforce - all we need is for Regulators to regulate and also penalize those who act outside that regulation. Mr Moore, a trained barrister, points out that the reckless mis-selling of financial products, including PPI, is a criminal offence under section 397 of the Financial Services and Markets Act 2000. "We put people in prison for stealing a water bottle when they get carried away in a riot but we let top directors of banks, [who are] paid millions, get away with putting compensation provisions on their balance sheets and monetising their morality and illegality." - 2nd August 2012

IBAS Comment: The campaigning group Bully-Banks was set up as a self help group to help those affected by SWAPS 'mis-selling' because the banks would not deal with the individual and legitimate complaints of dishonest selling of those products and neither did the FOS, who accepted the bank's position without proper investigations. The banks and the FSA have managed to create a huge financial scandal which is now being debated by MP's - as well it should be. Whilst it appears the FSA and banks are now co-operating in some sort of redress - unfortunately, as with all such matters the 'devil is in the detail' and from what we have seen so far all 'the detail' favours the banks - not those robbed by the banks of their business and future.

IBAS warned this was a major issue and just like PPI - the first reaction of the FSA was to smother it - rather than deal with it. Instead, they and the banks have acted together to attempt to limit the damage from it. Sorry, but it’s now too late to do that. Deliberate inaction by banks on the SWAPS complaints individually and much more recently the FSA's deliberate attempts to limit the likely damage to the banks (due to their greed) has now created an animal which has grown quickly into a major small business issue and where banking trust & integrity are shown to be non existent. The moral is that the banks just cannot continue to rob small businesses and take their assets (as they have done and continued to do - decade after decade) and expect to now get away with it. But, it also means the whole small business funding issue is also now under a microscope. Government must rethink the role of banks in future funding for small business because banks just cannot be trusted with their growth. Banks are not properly policed and we doubt the FSA will to do it. The UK has already lost too many small businesses in supporting banks - the focus must be reversed - 31st July 2012

HSBC will be forced on Monday to set aside well over £500m to compensate victims of insurance mis-selling - as the reputational crisis gripping the banking industry continues to deepen. I have learned that the bank, which has in recent weeks been embroiled in a lurid money-laundering scandal in the US, will say in its half-year results that it has made a provision of well over £300m to settle payment protection insurance (PPI) claims.It will also disclose that somewhere in the region of £200m is being made available to provide redress to businesses which were mis-sold interest rate swaps following last month’s industry-wide settlement with the Financial Services Authority (FSA). So far in 2012, Britain ’s banks have set aside £2.25bn for mis-selling compensation, while Barclays has been fined £290m for its role in the international Libor-rigging scandal. – Sky Business News 28th July 2012

IBAS Comment: Having seen agreements for SWAPS interest rate fixing, this appears to us to have been a deliberate, concerted and dishonest sales campaign by a number of UK banks, which targeted small to medium sized businesses who were selected probably because: a) the business and owners were not suitably equipped to sign into such sophisticated financial instruments because they or their advisors could not understand the complicated financial instrument being sold and/or b) because the customer 'trusted' the bank to 'advise' them for their best interest (something we would not suggest any small business should do). As these customers were identified by their existing relationship manager (it is possible they were selected because they were naive or the bank believed they could be easily fooled) and the hook often 'baited' by the banker's comments and fears placed of rate increases at a time of either new borrowing or reviews of borrowing - it further evidences just how big a deception this 'mis-selling' issue is and was.

A more suitable term in our view would be fraudulent deception and theft as many of the businesses buying into SWAPS were doing so to protect against rising interest rates (as they had invariably been led to believe the bank itself believed interest rates would rise) and the 'flip side' of the coin (lower interest rates) was completely understated or not discussed at all and the often huge 'breakage costs' either not mentioned or minimized. Deliberate and deceptive sales tactics in deliberately overstating the possibility of the increase in interest rates and by also advising the businesses that the bank itself believed interest rates would rise enhanced that specific fear and also introduced the 'need' for the product the bank wanted to sell into the SME's/owners mind and thought process.The bank sales team then exploited the fear of interest rates rising and the costs of that occurring and enlarged upon it. In many cases the bank having increased the fear of interest rates rising then also 'required' the business to 'support' the businesses borrowings 'against that occurrence' on their loans and mortgages by signing into the bank's own 'Treasury product' to 'protect' them.

Invariably that 'Treasury product' was overpriced, oversold, hugely profitable to the bank, highly profitable to the bank's sales 'Team' of Relationship Manager and the Treasury expert (so called - but a salesman/woman on commissions) which then allowed bank targets to be met for increased profits and a further widening of margins for the bank. However, many such arrangements were also 'tied' to assets and because of the variations in term, SWAP term and loan/mortgage term/s many customers found they were 'tied' in more ways than one. They also found that the 'product' sold to them was not for their protection at all but yet another way of bankers 'fleecing' small business and taking their assets without any protection at all as was the case with PPI - 29th July 2012

RBS pays more than £25m to businessman David Agar over interest rate swaps.Royal Bank of Scotland has paid more than €30m (£25m) to a businessman who claimed the bank mis-sold him an interest rate swap. The case could open the floodgates to hundreds of millions and even billions of pounds in claims against the taxpayer-backed lender and other banks. RBS’s Irish subsidiary last week agreed a settlement with Dublin-based businessman David Agar that will see it write-off swaps and loans worth €30m as well as covering Mr Agar’s legal costs, which are believed to total about €1m. - 28th July 2012 Daily Telegraph

We placed the following article here early in 2012 - The next Bank mis-selling scandal? - when the IBAS comment on Banks, interest rate SWAPS was:

IBAS Comment: We believe this is another mis-selling scandal and that many businesses face going bust because greedy banks found yet another way to 'fleece' their customers and provide themselves with profits by using very underhand tactics and schemes. These were aimed intentionally at 'hoodwinking' those unsuspecting and unknowing business bank customers who assumed (wrongly) that banks were working in their (the customer's) best interest. As we state (again and again!) - banks are only interested in making more profit from customers. Any bank 'suggestion' based on what the bank states is in the customer's best interest must always be viewed with intense suspicion. Beware any business now faced with a bank suggestion to 'fix' their rates by a complicated and sophisticated method which even bankers do not fully understand. The chairman of the powerful Treasury Select Committee has intervened in the growing controversy over the sale of complex derivatives by investment banks to small businesses. "I intend to write to the chairman of the FSA for an explanation of how this issue is being handled," said Mr Tyrie. IBAS wish him well with that we all would appreciate knowing if the FSA has done anything in this specific area - as more evidence has been provided. The Treasury has said it is to examine small firms' complaints over the alleged mis-selling of interest rate swaps - but the FSA as regulator still appears 'asleep' on the job - or perhaps just looking in the other direction (again) as more small businesses fold under the weight of some truly horrific bank excess?

Bank rules seek to prevent account mis-selling. New rules will ensure customers are assessed to ensure they are eligible to claim insurance offered as part of paid-for bank accounts. The rules, set for the end of March 2013, come after review by the City watchdog aimed at preventing the mis-selling of packaged bank accounts. The Financial Services Authority (FSA) said one in five UK adults had such an account. The products carry a fee, but include add-ons such as insurance or discounts. "These products are often referred to as upgraded accounts, but if you end up paying for an element you cannot claim on, it is money down the drain," said Sheila Nicoll, FSA director of policy. "We are closely monitoring the promotion of packaged bank accounts and the new rules will make sure customers know what they are buying and that they can rely on the product or have the limitations explained before buying." - 27th July 2012 BBC News

IBAS Comment: This area provides a large and new income stream for banks. They are seeking additional profits from current accounts and to do so - are providing gimmicks as 'add ons' - which in the majority of cases is not good value for money or of real use to the customer. It was a good marketing idea but is in reality often very poor value. Unless you really need and will use such 'add ons' and have compared their value 'like for like' with an alternative supplier - refuse these products. Bank users and all consumers need to be much more aware that by accepting poor value products from banks they are also continuing to 'feed' an 'animal' with little social honesty - seek these products from more 'social' and honest suppliers - by doing that with all products we might then change banks anti - social culture and behavior.

BBA 'warned weekly' in 2008 about Libor says former rate-compiler - The British Bankers Association was given weekly warnings in 2008 that the process of setting the Libor interest rates was being distorted. A former member of the Libor compilation team at Thomson Reuters says it regularly warned senior BBA staff about the problem. Its reports regularly highlighted the implausible rate submissions of several banks involved in the Libor process. During 2008, the BBA initiated a review of the Libor-setting process, a review which it is now known was initially regarded by the Bank of England as wholly inadequate.What amazes the former rate-compiler most is that it has taken four years for the problem to be exposed. "I don't understand why it has taken so long," he said. "If they sat half a dozen ex-traders together in a room, I am sure within 20-30 minutes you would get all the dark secrets."

IBAS Comment: Yes, we think so too - 'all the dark secrets' could have been obtained quite easily - if anyone had really wanted to know. The BBA is now wholly discredited as an ‘independent’ body and should be excluded from any involvement or dialogue for future rate setting processes. The Bank of England in knowing the BBA review was wholly inadequate then did nothing – why exactly was that? Also, why has it taken another 4 years and then the FSA had to be led by the nose by the USA? There are no fines which could put these matters right. We want ‘heads rolling’ for the continuing examples of collusion, incompetence and gross negligence. Why precisely when the Bank of England knew the BBA's review in 2008 was wholly inadequate did it still did nothing about it? A very apt Henry Ford quote which we have borrowed from Honestly Banking is: "It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning." - Henry Ford

Warning to Government: The people are understanding quickly now just how this 'system' works and also understanding that it works very well indeed for a minority who pocket millions and then get knighthoods and even more power - so no more fob offs, no long investigations or FSA drivel on what may be done in future – we all want immediate and positive action/s and 'heads rolling' - 26.07.12 BBC News

SWAPS - LIBOR - THE BBA and setting LIBOR - TRUST (or serious lack of it everywhere) because of the most recent corruption and much more Can you trust your bank? Channel 4.

The Barclays interest rate scandal, unimaginable bonuses and insurance miss-selling have put the banking sector firmly in the public spotlight. In this special report, Jon Snow travels around the UK, meeting consumers, businesses and bankers, to ask whether we can trust our banks.

Update on the Hendersons' story: Since filming, the Hendersons, who run a sign making business in Putney and feature in this film, have secured a loan from their bank RBS. This will help pay their creditors whilst their case is being reviewed. SWAPS - Miss selling - interview with Stephen Hester at RBS and what it means to the customer when it goes wrong.

IBAS Comment: Most telling of all was the You Gov poll carried out which showed that only 41% now trust their bank - only 7% believe the banks are doing enough to help small business and only 18% say they can trust Government to regulate the banks. Those figures show a truly massive decrease in trust of the banks, what they do and also the will of government to put it right.

For 20 years IBAS has been 'banging the drum' for banking reform and proper policing of the industry - to prevent such a day as this. Nobody listened because the banking sector was making so much money - now you all know how they made their money and we all know who will pay to put it right - Joe Public but Joe Public wants 'heads on sticks' now and they want those who have created this mess properly punished and unless Government listens and acts very quickly indeed - all trust will be lost in them as well. - 25.07.12

SWAPS - Big four banks look unlikely to reveal punishment for scandals as profits rise - The Mail comments that: ‘The big four were also involved in miss-selling ‘swap’ contracts – deals to fix interest rates – to small and medium-sized firms for whom they were not suitable. The arrangements were supposed to protect them against fluctuating interest rate rises, but when rates fell, many found themselves locked into expensive contracts. The FSA recently agreed a compensation scheme. However, civil actions over miss-sold interest rate swaps to British businesses are not expected to feature in the provisions because the banks regard the likely fallout as insignificant.'

IBAS Comment: What the banks say or ‘regard’ as likely - is normally completely untruthful. We only have to look back at the start of PPI claims (which are now estimated at costing the banks £10bn) which were resisted by the banks, resisted by the FOS and only when the press became intolerable acted on by the FSA - to know that the FSA is trying to keep ‘a lid’ on the Interest Rate Swaps miss selling saga. By diluting who can and who cannot make a claim in the FSA ‘compensation scheme’ the FSA has already shown their strategy and don’t forget they had an early whistle blower in March 2011. Banks already involved in litigation are using the strategy of paying out where they are at serious risk from a court judgment against them. That strategy will keep those claims off ‘balance sheet’ - so the subterfuge and distortion of facts has already begun. With the FSA assisting the banks with a ‘back room’ agreement to limit such claims, who knows what the actual miss selling figure might be. But, we are sure that (as with PPI) the banks will never pay out what they owe and that means many businesses will go ‘to the wall’ as they are deprived of funds with which to fight back. Whilst the UK has such a one sided system of redress (and please don’t suggest the FOS is capable of investigating such matters) business cannot rely on the banking complaints ’system’ to which business are ‘guided’ immediately they have bank problem or dispute. That ‘system’ and the manner in which it operates and automatically accepts banker’s untruthful notes, quotes and doctored paperwork - appears to us to favour banks much better than it will ever protect bank consumers and is unfairly biased towards bank and bankers - 22.07.12

Libor scandal: Bankers discussed concerns in 2008 - Bank of England Governor Sir Mervyn King and US Treasury Secretary Timothy Geithner discussed concern about Libor interest rates as early as May 2008. Mr Geithner, who headed the New York Federal Reserve at the time, called for procedures to prevent misreporting. - 13.07.12 BBC Business News

IBAS Comments: From the emails back and forth it is evident that the BBA was included in the 'loop' between the Federal Reserve and the Bank of England on the Libor concerns back in 2008 - so why have we now just had such an 'explosive' revelation in 2012 regarding Barclays Bank and Libor rates? Our thinking is that forewarned is not forearmed when bankers are made aware of the 'loopholes' - just that they manage to exploit them even more and for longer whilst they 'cover up' better whilst doing so. If the BBA had any financial credibility before this 'revelation' they have certainly lost it now with the UK public and they should not be anywhere near any form of rate setting because it is clear they are part of the problem not the solution. Added to that revelation there is also the cozy connection between the BBA and the FSA evidenced by Who's side is the watchdog on? Thanks to investigative journalists at The Bureau of Investigative Journalism for their input and information and we trust they will continue to keep us all informed regarding the corruptive elements at work in UK financial services. Unfortunately, with revelations like these coming 'thick and fast' it appears that any trust in the FSA is misplaced.

Challenger banks and Why breaking up will be hard to do - Last Friday, the Co-op reported a 48% increase in online current account applications for the past two weeks compared to the previous two weeks. Nationwide says it has seen a 45% rise in people transferring their main account to the Society in the past fortnight. Meanwhile, the Cumberland Building Society has reported that current account applications are running 50% higher than the normal weekly average. "Customers now want to think about a different way of doing banking," says Hilary McVitty, head of external affairs for the Building Societies Association. - 11th July 2012 BBC News Business

IBAS Comments: That's really encouraging news for all banking consumers and shows the impact of negative bank news is at last making individuals act to do something themselves to break the hold that banks have on their lives. We all need to do something today to encourage the social aspects of lending and banking, whether it's subscribing to a social lender or building a new co-operative venture or starting something to help others like Burnley Savings and Loans Ltd which officially opened its doors in September 2011. We need local enterprise and local people building businesses on a local basis like credit unions to replace the too big, inefficient and greedy monopolistic banks who aim for maximum profit. We all know where that has led and the mess they have created from it - whilst banks have 'picked our pockets' clean. No good leaving it to regulators and politicians it will never happen - too much talking and too much delay and inevitably still too much corruption. It needs people power in large numbers to make change happen with everyone doing their bit by changing what they do and how they do it. Selecting to use more social banking methods and more social businesses with which to work, build, save and borrow.

Lobbying's Hidden Influence - The Finance Lobby, how it works and why banks have been allowed to enjoy such a long and uninterrupted plundering of bank consumers using every devious tactic that they could 'dream up' for a fast profit. The Bureau of Investigative Journalism article states: 'The size and scale of Britain’s financial lobby has never been quantified – until now'. We believe there are 93m reasons (in their investigation) as to why banks have been able to get away with multiple thefts from their customers over the last two decades without censure or any personal prosecutions. Also, it explains why Cruickshank's recommendations were shelved after extensive investigation of the banking industry when bank's methods, unfair trading and dominant position were proven in 2000.

Bank shares rose immediately on publication of Cruickshank's recommendation because those 'in the know' already had copies of the result and also knew the Cruickshank investigation results and analysis would not be acted upon by the Government - then, or at all. We now have the evidence of what repeated Government inactivity because of the incessant bank lobbying over two decades has meant for UK Public and what absolute financial corruption and financial chaos has been allowed to destroy the UK - not only now but for many years in the future. Is it over now - of course not - we have merely seen the tip of the iceberg.

IBAS Comments: As further event unfold we are reminded of the three monkeys - one hears nothing, one sees nothing and the other says nothing. Those 'monkeys' and their relatives are all apparently now running the major banks in the UK and they have all been vetted and approved by the FSA as 'fit and proper' persons. Time to recheck those approvals but also time to check on who is lobbying who and for what benefit for and to banks and bankers.

US regulator demands 'effective cop' for UK Libor bank - Libor is the "London Interbank Offered Rate" and is - as the name suggests - compiled and set in London by the British Bankers' Association. So, a key question in all this is why on earth it took a US regulator to spot a problem in the UK? Mr Gensler acknowledges that it has put the UK regulatory system in the spotlight. "I would note the British Bankers' Association is not regulated and it does raise the question about the reliance on self-regulation," he said.

City of London 's reputation harmed by Lie-bor - Ruth Sunderland says: ‘Give a man a gun and he can rob a bank; give a man a bank and he can rob everyone.’ Also, ‘First, the LIBOR (surely it must now be re-named Lie-bor) rate-setting system is amateurish, all-too-easy to finesse, and ineffectually supervised by industry body the British Bankers’ Association, a cheerleader whose trademark speciality is defending the indefensible. In the thick of the crisis, it was an open secret that LIBOR rates had lost touch with reality – or at least it was to everyone except the BBA and the regulators. LIBOR needs an urgent overhaul if it is to continue as an international benchmark.’ & also ‘ At a time when we desperately need a functioning financial system to help revive our stalling economy, we are confronted instead with incompetence and corruption.

IBAS Comments: Mr Gensler and Ruth Sunderland are ‘telling it - as it is’. Corruption is the major source of our current financial problem, incompetence is often used as a shield for it - but ‘banking rotten apples’ have never been 'sorted' or even acknowledged, let alone purged. The volume of perpetrators has grown day on day because they saw no risk of personal prosecution. Now is the time for that purge!

But, can LIBOR rates really stand the scrutiny and continue to be credible?

We have seen banks pushing LIBOR rate instead of using the Bank's Base Rate because they know the banks can control it at an artificial level for banker’s benefit. With an estimated $350tn of transactions pegged to Libor it provides 'opportunity' for banks to make some spectacular and illegal financial gains - it is like insider trading on shares only much worse. As Mr Gensler says the BBA is not regulated nor is it in our opinion the correct body for such a job. The Bank of England is the only body that can now take on such a role of trust. We all trust the bank to set the Base Rate - let them set all rates. There would be confidence in the Bank of England, whereas as events have evidenced banks and their own trade body just cannot be trusted with such ‘regulation’ nor should they be allowed to operate such a system. - 4th July 2012

IBAS Comment: During 2012 we have seen the 'wheels come of the vehicle' of UK Banking in spectacular fashion. Nobody will ever now believe that banks can or will control their own desires for profit at any cost (for their customers) or that they might ever treat their business or personal customers in a fair or honest way. The list of financial abuse of banking customers appears endless. With almost every business in the UK having been affected by banker's whims, excesses and deliberate deception, double dealing and often just plain lies. Now we have 'interest rates swaps' coming out into the light and showing exactly how greedy and unscrupulous our bankers have become. Banker's ruthlessness has driven many into depression, others into despair and other still into abject poverty.

The FSA's 11 Principles were intended by the FSA to 'lead' the banks into more decent, social and honest behavior. Obviously they have now been ditched by the FSA as being completely unfit for purpose and a further failure - as ordinary UK businesses have been trodden into the ground by a succession of money crazed bankers stampeding over their customer's best financial interest and their future prospects by using teams of Arthur Daleys who have plundered and lined their own pockets - whilst dreaming up even bigger scams and schemes to 'fleece the punters' in order to make bigger profits for their bank.

Integrity and honesty has been completely forgotten whilst the new banker's creed of 'greed is good' took their place as they produced nothing and stifling everything - allowed to do what terrorists were unable to do - bring the UK to its knees.

Now the talk is of more bank reviews and investigations into banking - why? (Cruickshank 2000 - how much notice was taken then?) Is it just inter party politics and/or bank lobbying? We all know why there is a problem. It's been caused by the failure of regulation and a failure to use the existing theft laws on banks and bankers.

There has been plenty of regulation introduced. What we need is the desire to use what is already there and in place and then fine tune some of that. We do not need another two or three years negotiations and bargaining between bankers / regulators and then Government. Bankers love that extra time and inertia because it means they can continue with their 'hand in our pockets'. It's been an effective strategy for the banks for many years. Take away the inertia. Start acting immediately by using regulation and law that already exists to make changes happen now.

In the FSA/PN/053/2009 document dated 24 April 2009 the FSA stated: 'The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; securing the appropriate degree of protection for consumers; and fighting financial crime.' - The FSA has now failed in all 4

The FSA said in 'An update on our approach' – (summary) 'that by the end of December 2008 we expect firms to be able to demonstrate to themselves and to us that they are consistently treating their customers fairly.' - That failed miserably.

In April 2007 the FSA Publication Principle based regulation showed a 'brave new world' where the FSA stated: 'We believe that, in many circumstances, the economic and business interests of firms’ senior management and their Boards and shareholders can be aligned more effectively with our regulatory goals through a principles-based approach. In practice this means giving firms increased flexibility to decide more often for themselves what business processes and controls they should operate. - The FSA assumed the banks had existing integrity and basic honesty - so that was doomed to fail.

'Systematic dishonesty' at Barclays, says former boss. - The former chief executive of Barclays Martin Taylor has told the BBC that Barclays' actions amount to "systematic dishonesty". Barclays was fined £290m ($450m) for trying to manipulate interest rates at which banks lend to each other. Martin Taylor, who was chief executive, of the bank from 1994 to 1998 said that Barclays' deception looks like a deliberate strategy as it had been going on for years. Other banks are also being probed.- 28 June 2012 BBC Business News

IBAS Comment: This investigation is now focused on another 40 banks. Yes, forty banks. Tampering with LIBOR rates affects all basic trades and banks know that very well indeed. They have used the LIBOR rates to illustrate how costs for borrowing from other banks have risen for them and as an excuse for inflicting higher margins and rates on their customers. There has been considerable concern about the way in which LIBOR rates have been 'fixed' and whether rates have been tampered with for the bank's benefit. The result from this investigation shows that banks will stoop as low as they can to fix/tamper/manipulate any system for their own benefit. It seems that Integrity and honesty are now no longer any part of banking. The US Department of Justice has also said criminal investigations into "other financial institutions and individuals" was ongoing.

Will the UK act on these criminal matters pervading the UK banking system or will it be a 'slap on the wrist' - again? We have not yet seen a banker face charges for their criminal conduct - why not? It is not enough to fine and publicize banks - that just impacts on the customer paying higher fees and charges. Bankers need to know they will face criminal charges for intentional criminal activity and that when they 'cross the line' it will not be for a bottle of champagne but a prison sentence.

Bank boss 'must pay price' for accounts shambles: RBS chief faces calls to forfeit another bonus as crisis is linked to IT team in India . Banker Stephen Hester faced calls to forfeit his bonus and fall on his sword yesterday after the computer meltdown continued to cause chaos for millions. A leading peer said there was ‘no question’ of the Royal Bank of Scotland chief executive receiving an annual  bonus from the state-owned bank – if he was allowed to keep his job. His remarks came as it emerged the software support team for the at-fault computer programme is based in India

As the crisis dragged into a second week, RBS insisted its computer systems were now ‘operating normally’, although it admitted there was still a backlog to clear. But customers questioned how an apparently routine software update on Tuesday night could have brought millions of accounts to a standstill.

Asked if RBS executives would receive bonuses this year, Mr Hester said: ‘Anyone who is thinking about bonuses, I’m afraid I have no patience for them.’ Lord Oakeshott said: ‘If Stephen Hester even thinks there’s any question of him getting a bonus this year that just shows how out of touch he is with ordinary taxpayers and customers ... There is a very serious question whether he should still be in his job.’ Eddy Weatherill, of the Independent Banking Advisory Service, said: ‘The very basics of banking seem to have eluded RBS. I feel there are no bonuses to be given here for any of the top executive team.’ - Daily Mail 25/06/12

IBAS Comment: Basic banking availability at NatWest still uncertain? Possibly caused in India? Both serious issues which evidence how the UK banking industry's desire for 'outsourcing' may prove costly for the bank - but more so for all their customers.

Farepak trial collapse: who's to blame? - The collapse cost Ms Hall, who now leads the pressure group unFairpak, and her 120,000 fellow savers £37m. It ruined their Christmas. Nearly six years on it continues to wreak havoc on the reputation of some of the most high-profile directors and politicians in the country. All for just £3m. As was spelt out in the High Court last week Farepak never needed to go under. A loan from HBOS of just a few million pounds at the right time would have allowed the company to stay afloat.

Speaking after the disqualification case against the Farepak directors collapsed on Wednesday, the judge who is overseeing it, Mr Justice Smith, said: “It appears, in rough and ready terms, that further investment from the bank of £3m to £5m would have probably saved the group. But HBOS was not prepared to make it.” The reason for the lack of success? HBOS. “All of these proposals, failed … on the flinty ground of HBOS, which had a policy of playing hardball of which it appeared to be proud,” said Mr Smith.

Worse the bank “forced” the directors of Farepak to continue taking money from depositors – up to £10m of it – in the knowledge the company was heading for insolvency. The behaviour led Mr Smith to call on HBOS, now owned by Lloyds, to top up a £2m payment it made to the Farepak depositors’ compensation fund. Sir Clive Thompson agreed: “On HBOS – the judge has his views with which I concur. He referenced a moral judgment. I personally felt that the longer that the delay [in not halting the receipt of savers’ money] the greater the obligation on HBOS to accept a solvent solution. I was stunned when they withdrew support.”

The “verdict” by Mr Smith was damning. He blamed HBOS for the debacle. Peter Cummings, the bank’s former head of commercial lending was pinpointed as the “ultimate arbiter” of many of these decisions. With the directors cleared and HBOS back in the dock, the only question is how much the bank will pay the victims. – 23 June 2012 The Telegraph

IBAS Comment: The statement that: ' the bank “forced” the directors of Farepak to continue taking money from depositors – up to £10m of it – in the knowledge the company was heading for insolvency.' - should be a matter that requires complete and thorough investigation by the banking regulator and not something that takes 3 -5 years either. This matter has been going on long enough already. If the bank did what has been stated - then the bank should now fully compensate all those who have lost money and reputations due to conduct which (if proven) is indefensible and completely abhorrent 'unfair trading' and undue pressure exerted because of a conflict of interest. If regulation does not properly work when such matters surface - then the future is almost unthinkable for UK financial services where damaging issues now follow each other in quick succession and contagion from reputational damage is a real prospect.

Farepak collapse: Judge partly blames HBOS bank - In a highly unusual move, the judge called on the bank to return up to £10m more to the customers who lost savings. The directors had been accused of continuing to accept the customers payments during the course of 2006 as the company headed for insolvency, knowing that they would probably lose their money anyway when the company finally went bust.

However the judge said that all the witnesses to the case had made no criticism of the directors, and in fact their attempt to keep going while looking for a solvent solution for the company had been reasonable. "If they want to try and save the company in a non-insolvent way the only way to do that is to continue trading, if they do not continue trading the group collapses," the judge said. "Not only did the directors do nothing wrong, but they made genuine strenuous efforts to save the group and the depositors. "They did everything, as far as I can see, possible to save the group," he added.

But Mr Justice Smith severely criticised the role of the firm's bankers, HBOS, while the directors were struggling to keep the firm afloat. "They in effect forced the directors to carry on in September and October collecting deposits, that at a time when they believed there would be an insolvent solution," he said. An extra £10m came in from customers, £4m of which went into Farepak's bank account and £6m of which was used to keep on trading, which would be to the benefit of HBOS when the firm was eventually sold after going bust.

"HBOS knew that those deposits would be paid and would be lost if their expected solution went out and that the only beneficiary of those deposits would be HBOS," the judge added. An extension of Farepak's overdraft by £3 to £5m from HBOS might have kept Farepak going, the judge said, but the bank was not prepared to do this. The directors efforts "failed over the period between March and October 2006 on the flinty ground of HBOS, which had a policy of playing hardball, of which it appeared to be proud, and conceding nothing," he said.

That was because HBOS had its overdraft of £40m to the company secured so it would be fully repaid in the event the firm went bust. Mr Justice Smith ended by stating that if the government had taken the same hard nosed attitude to HBOS when the bank had to be rescued two years later in the depths of the banking crisis, the bank would not have survived. – 21 June 2012 BBC Business News

IBAS Comment: At last the recoveries and collections 'end' of UK banks is brought out 'into the open' for all to see. Mr Justice Smith clearly felt the need to make the comments he did and we applaud him for it. Bank Recovery Departments (of all major banks) are left to do their worst without proper supervision or regulation being enforced. The result from the failure of Farepak was to detrimentally affect many very ordinary people who could ill afford their loss and it is a very good example of exactly how the bank's own interest overrides all other interests.

It is also a matter of great concern that the Insolvency Service were prepared to lay blame at the directors doors when the bank was clearly instrumental in 'driving' the directors to insolvency whilst protecting the bank first, last and foremost. A fact that Mr Justice Smith clearly picked from the evidences. So, a good 'own goal' for the banks with maximum publicity for their recovery methods and operations. But, what does it say about UK regulation and supervision of that specific area of banking?

Perhaps, unregulated, unwatched and unsupervised are three words that come to mind. Once the bank has gorged itself by depleting the business cashflow with additional fees and charges and then toppled or pushed the business into insolvency, the bank recovery departments are allowed too much leeway in wringing as much as they can from the business and after that the directors personal assets - It is an unequal world made much worse by inadequate regulation and supervision and where entitles like the BIS appear to have their eyes blinkered and their hands tied.

Start-up loans scheme to help young people launched- An £82m loan scheme for young people wanting to create a business has been launched by David Cameron. People aged between 18 and 24   can apply for funds expected to typically be about £2,500.

Mr Cameron said: "I want this to be the year where people can think: yes, I can do it; that we can get as many viable businesses as possible off the ground, that people can have a go and that we see a whole new wave of entrepreneurs who start small but think big." The interest rate of RPI +3% is reasonable compared with the alternatives available to small businesses, according to a business loans expert. RPI in April stood at 3.5%.

"It's a very realistic and manageable rate for small businesses as opposed to credit cards and overdrafts which would be much more expensive," said Eddy Weatherill, chief executive of the Independent Banking Advisory Service. Young entrepreneurs would find unsecured business loans "difficult to come by from banks", he added. - 28 May 2012   BBC News Business

IBAS Comment: Its a start for those wanting to start a very small business and we welcome that. But, with bank reluctance to lend (or continue to lend) to those already established in business and their 'look after the bank first' ideology UK business is not improving. Banks are obstructing businesses which need more than 'on the drip' access to funds. Even businesses which normally would not be 'at risk' are now at risk or feeling less secure and threatened by the aftermath of what is a bank created problem. That is not a good recipe UK improvement. Business needs confidence and that confidence is eroded by banks reneging on agreements or demanding repayment for borrowings on overdraft and loans by using the small print of the agreements to inflate charges and fees which can topple a business into failure. If you have made a complaint direct to the FSA on such matters you will have found out that the FSA is not policing their own published FSA Business Principles and that they refuse to look at matters which they say are 'commercial decisions on lending' and which are outside their remit. That means the banks continue to exert pressure on business which are unfair and purely contrived for the bank's benefit and currently banks are being allowed to plunder businesses unfairly and continuously to fill their own coffers - because the FSA will not act.

Clearly Government needs to support banks because they have to - but whilst the bank is being protected that protection is abused to then disadvantage business. Businesses which should not fail will continue to do so whilst those practices are allowed to continue - starting more very small businesses is not the answer. Whilst it may form a part of the answer the UK also needs to provide existing businesses with a safer borrowing environment than purely bank lending or bank controlled/ administrated lending (EFG) - which continues to operate on the umbrella principle - never there when you need it or for the amount necessary or required to fit the requirement.

The FSA or the new FCA MUST get this part of regulation right and quickly - they are 'in place' to regulate - they need to use the FSA Principles of Business and make the banks follow it - or bin it as being yet another failure before many more businesses cease to exist - as their owners and directors are 'plundered' and asset stripped by bank recovery departments to a point of personal destitution and where they will never operate a business again. The loss to the UK of such people is immense in human terms and because we also need small business to operate and provide more jobs quickly. So what and who is now protecting businesses against banks unfair and continual initiatives to drive margins up and demand repayments once the bank has forced the business failure? The answer is that no one is - even MPs do not understand that the FSA is not policing their own published FSA Business Principles (we do not need another beaurocratic publisher we need a proper regulator) or that the Financial Ombudsman Service (to whom all complaints are automatically funneled) is not only limited and many would say biased but they also adopt the 'commercial decisions on lending' are outside their remit argument to void those type of complaints.

A recently-launched inquiry into the apparent mis-selling of interest rate swaps to small and medium-sized businesses (SMEs)' and "The impression was given that the [new] regulator would like to use media pressure to score a high-profile 'win' against the banks." An FSA spokesman said: "The work we are doing at the moment is to find out more about the products sold, how they were sold, and whether they met customers' needs. We have already received some detailed information from banks in connection with their sales of interest rate swaps which we are considering and we have also spoken to a number of customers who have been affected. If we find widespread evidence of breaches or mis-selling we will take appropriate action."

IBAS Comment: Well the content of this report looks great (on a quick read) we would suggest that If you and your business were mis-sold a 'swop' (which has now turned into a con with the bank making more money than was either reasonable or fair) that you make your complaint direct to the FSA - the opportunity is there - so use it now. If enough people make those complaints the FSA will eventually get the message.

So far, our impressions of the FSA as a regulator is that they have been less than impressive (many would say very poor) and this particular 'scam' provides yet another opportunity for the FSA to correct that weak position and show they are not just a beaurocratic joke. Banks have repeatedly and completely out maneuvered this regulator. Whilst the FSA accepted bankers 'promises' to do better, the banks saw that as weakness (which it was) and just kept on robbing their customers wherever and whenever they could. PPI proved that specific point without any of the other 'scams' being brought into the discussion. All the banking scams have proved that the FSA were just not good enough and certainly not quick enough (or perhaps not willing enough) to firstly identify the 'scam' itself and then to act upon it to prevent even more victims.

By now the FSA should have got the message that only strong and swift action will clean up UK banking. When UK customers see the major high street banks being swiftly penalized (it should not take years) for continually conning customers (by banks using get rich quick schemes to rob customers) they may then start to have respect for the FSA (and the new FCA) and some confidence that UK banking may regain the honesty and integrity (which has been lost) with which to provide customers with a fair and honest deal. - 4 May 2012 Sky Business News

Barclays' Profits Hit By New £300m PPI Bill - Barclays has reported a statutory pre-tax loss of £475m after being hit by a bigger compensation bill for mis-selling payment protection insurance and a massive accounting loss. - 26 April 2012 Sky Business

IBAS Comment: The PPI bill mounts up as banks are forced to own up.

Wall Street comes to Watton - Robert Peston raises the issues surrounding sales of complicated derivatives and interest rate collars, caps and swaps transactions to small businesses - sold by banks under various names but invariably under the auspices of providing protection for the business. Normally, these complicated mechanisms were sold to provide protection against interest rates increasing - which was a common fear for small businesses at that time. Robert Peston states: ‘The problem, as Mr Adcock's pain may indicate, is that the customers didn't always understand that the nature of their relationship with their bankers had changed.’

Although IBAS has been ‘banging the same drum’ for twenty years and specifically that banks and their employees are not to be trusted to provide advice to businesses or at all - Bank customers continue making the same mistake in a) trusting their bank and b) taking the bank’s advice – and that is what the bank’s continue to profit from. Banks and bankers do not provide advice for any business’s benefit - it is so they can make a sale for the bank and profit from it - as the PPI miss-selling compensation issue should by now have proved to all bank customers.

Robert Peston says: ‘The watchdog is very close to finishing a preliminary probe into sales of swaps by banks to small businesses. On the basis of what it has found from a detailed survey of banks' behavior, it will then decide whether to launch a more aggressive investigation.’ & that: ‘This cultural revolution may have implications for what action the FSA ultimately takes.’ It is apparent to IBAS that the bank sales of derivatives based products considerably understated any risk to the customer (or their business) from the details embodied within those ‘instruments’ at the point of sale. The bank carefully constructed a legal agreement from the inception of such arrangements to evidence (for the bank’s benefit later) that the customer was ‘signing into a legal agreement that they either fully understood or had taken appropriate legal and financial advice upon, before signing – the banks knew that would provide protection for them and preclude their customer’s escape from such an onerous contract.

The banks were also aware that the FOS would be unlikely to ‘find’ in favour of anyone who complained on the basis of: a) if the customer fell within the FOS remit the FOS would not support the complaint based on the legality of the signed documents and disclaimers of proper independent advice and without any further enquiry from the FOS into the method or sales of these products - or alternatively b) because of the size of their business the customer would be excluded from making a complaint at all to the FOS. The huge profits to the bank and penalties for breaking the arrangement were neatly concealed within such documents.

IBAS has received complaints on derivative base hedges and swops which show that the businesses has been ‘caught’ by banks selling what in our opinion were extremely complicated financial instruments - which could not be fully understood by average business owners and upon which even a qualified accountant or advisor might find great difficulty properly advising. In our opinion very specialist financial advice would not only be required but was totally necessary to be able to fully identify, assess and then understand the nature of all risks fully before signing into such a document.

When such arrangements are put before the Financial Ombudsman Service as a complaint against the bank, it is predictable that the FOS will find nothing wrong in the arrangement itself, because legally the documents are pretty much ‘water tight’. The banks made sure of that. The area of concern is not after signing but before any signing. We are concerned ( and it should concern the FSA) that such arrangements were conceived by banks for use in normal business lending areas where unsophisticated borrowers were targeted. That's because these arrangements are sophisticated financial instruments, unsuitable, unacceptably complex and unnecessary for normal business needs or use. Our view is that the banks took advantage of businesses they targeted for such arrangements and generated a ‘climate’ of fear on impending interest rates and also that rates would rise considerably and in doing so overstated the need for the product they were selling whilst staying silent on the risks and penalties within such agreements.

There has been a long delay in the FSA deciding any action is required.

Unfortunately, this is the same pattern as with PPI and whilst huge amounts of PPI compensation will inevitably be paid out the time lost from complaints to initial investigations and then the FSA acting upon the evidence took many years. During those years only the banks were able to profit from the lack of regulatory action/s and they were able to use the capital sums involved (estimated £7 to 10bn) to continue to obtain more profits for themselves.

In our opinion the banks were allowed to profit from their miss selling - a highly unsatisfactory, unfair and one sided arrangement. Also, in our opinion the incredible slowness of the FSA acting (or reacting) to prevent miss selling and abuse does not evidence either effective or good regulation. Would any of us wait until our car blew up before seeking a repair for a smoking engine?

But, it appears to be the strategy employed by the FSA offers for bank customer protection – i.e. hand off, at a distance, out of sight and working at a ‘snails pace’ or not working at all, whilst long periods of time elapse. The loss of time in the FSA identifying what action they may take (or may not take) on miss selling of derivative interest rate financial instruments is therefore yet again to the advantage of the banks. Whilst, the FSA now ‘lumbers’ into a possible investigation/s the bank customers affected are at a complete disadvantage and are losing money, time and assets - whilst the bank continues to profit from the lack of action by the FSA.

We appreciate that the FSA does not investigate individual complaints and states clearly that it relies upon the Financial Ombudsman Service to carry out that process – it then also must follow that the FOS will be the collecting point at which such issues will first emerge or are first evidenced. However, IBAS has some concern in that area (after testing the FOS system over a number of years) on whether the FOS has any desire or the necessary brief to carry out such a function or indeed systems and linking infrastructure with the FSA to notify or act as an ‘early warning system’ for the FSA where any case of miss selling or customer abuse is evidenced.

That suspicion appears to be born out by the FOS themselves as they state in their FAQ’s page: ’ we do not monitor (or "regulate") businesses to make sure they follow the rules. This is the job of the regulators, such as the   Financial Services Authority (FSA)   and the   Office of Fair Trading (OFT) . ’ Whilst we are informed there is a ‘liaison’ between the FOS and the FSA how does that operate? – as it appears to us there is no proper machinery to allow the FOS to collect/collate/ or identify any matters which should be of concern to the FSA.

In our opinion the early PPI complaints to the FOS should have provided an early warning to the FSA that there were a number of serious issues building which were of considerable national concern. However, we are aware of complaints to the FOS over 12 years ago which identified PPI as a ‘scam’ and where PPI was ‘forced’ onto bank customers without any choice – unfortunately the FOS did not investigate those cases. It appears obvious that the FOS did not ‘identify’ PPI as a ‘scam’ at that time or indeed later, although it was totally unfair trading by the banks.

However, the PPI ‘scam’ remaining unnoticed and unreported by the FOS and banks continued to profit from it. In our opinion a major reason for the huge delay in PPI investigation by the FSA was the lack of any cohesive understanding or knowledge base between the FOS and FSA on miss selling or the abuse of customer by banks. The lack of any understanding or reporting for the benefit of Regulatory progress is a major concern.

If the new Financial Conduct Authority (FCA) is to operate more efficiently and effectively in future that factor should be corrected as a matter of priority. In the FCA’s Approach to Regulation (dated June 2011) and in the section ‘Securing an appropriate degree of protection for consumers’ at 3.8 the FCA document states: ‘any information which the Financial Ombudsman Service (the ombudsman service) has provided to the FCA;’ appears to be flawed at birth by the ability of the FOS to properly investigate such matters (or at all) and then to communicate such matters of concern to the FCA.

If it cannot work now between FOS and FSA what will change within their systems to enable it to work properly when the FCA takes over?

Fortunately, the media in this country did not leave the PPI issue alone and thanks to the media and the fact that PPI complaints reached almost epidemic proportion forced the FSA into investigating those complaints. But, many years were wasted whilst the banks continued to profit from FSA inaction and bank customers lost out as their businesses failed and for some any opportunity for compensation was denied them.

We can now see the same pattern appearing - a media driven campaign regarding sophisticated financial instruments which were sold by banks to normal and very average business people some years ago. These people were expected to understand and possess operational knowledge of such sophisticated instruments and also all the hidden charges, effects or penalties which were included and perfected by banks for bankers. So, is the FSA going to now use their 11 point Principles for Business as the yardstick for their investigation into this matter? Principle 7 is enough to seriously question what was being sold to ordinary business owners against what the bank knew collectively was most likely based on their superior knowledge base and also their sophisticated treasury computer programmes. - Source item from BBC News 09/04/12

The next Bank mis-selling scandal? - In recent years some businesses have found that their loans came with an important string attached as banks told borrowers that they must "hedge" their interest rate risk. That was back in the halcyon days of the boom, when lenders were mainly worried about rising interest rates. So the bank told businesses they would need to take out 'a hedge' with its investment banking unit. The hedge turned out to be a complicated financial contract known as an "interest rate swap" - something that is normally traded between financial institutions and much bigger corporations.

These  cases are coming to the fore because, with the economy in the doldrums and Bank of England interest rates so low - the cost of these hedges have become unsustainable for many of the businesses they were sold to. Lenders often show inappropriate and overly complex products that contain hidden dangers because it can make the hedge superficially more attractive, while also maximizing the bank's own profit. Do UK banks face another mis-selling scandal? - BBC News

IBAS Comment: We believe this is another mis-selling scandal and that many businesses face going bust because greedy banks found yet another way to 'fleece' their customers and provide themselves with profits by using very underhand tactics and schemes. These were aimed intentionally at 'hoodwinking' those unsuspecting and unknowing business bank customers who assumed (wrongly) that banks were working in their (the customer's) best interest. As we state (again and again!) - banks are only interested in making more profit from customers. Any bank 'suggestion' based on what the bank states is in the customer's best interest must always be viewed with intense suspicion. Beware any business now faced with a bank suggestion to 'fix' their rates by a complicated and sophisticated method which even bankers do not fully understand. The chairman of the powerful Treasury Select Committee has intervened in the growing controversy over the sale of complex derivatives by investment banks to small businesses. "I intend to write to the chairman of the FSA for an explanation of how this issue is being handled," said Mr Tyrie. IBAS wish him well with that we all would appreciate knowing if the FSA has done anything in this specific area - as more evidence has been provided. The Treasury has said it is to examine small firms' complaints over the alleged mis-selling of interest rate swaps - but the FSA as regulator still appears 'asleep' on the job - or perhaps just looking in the other direction (again) as more small businesses fold under the weight of some truly horrific bank excess?

FSA Bombshell changes everything for ex-HBOS directors Crosby, Stevenson and Cummings - FSA Final Notice to the Bank of Scotland on 9th March 2012 is as Ian Fraser says ‘as strong as it gets’ and this states that BOS broke Principal 3 of the FSA’s   11 principals of business. The Principal itself reads:- “3: Management and control – A firm must take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems.”

No financial penalty will be levied on HBOS for such a serious misconduct (although the FSA state it would have been substantial) because ‘As such public funds have already been expended in order to deal with the consequences of the very misconduct for which a financial penalty would be imposed and the Taxpayer would again be impacted by any such financial penalty.’ So what now?

The FSA has confirmed that it continues to pursue various other “enforcement actions” into BOS matters including into individuals - so the Final Notice may well expose former directors and senior management at the bank to additional investigation. So far, the FSA has looked inept and slow to investigate very serious banking issues. Will Operation Hornet be the 'final sting' and be used to properly prosecute those who created financial chaos out of their personal greed? - 14 March 2012

Thousands launch £3 billion legal action against Fred Goodwin - Former Royal Bank of Scotland chief executive Fred Goodwin and his ex-boardroom colleagues now face allegations that they misled shareholders into investing £12 billion in the bank shortly before its near-collapse. RBOS Shareholders Action Group will deliver ‘letters of claim’ to Edinburgh-based Goodwin, who was stripped of his knighthood in January, as well as the bank’s former chairman Sir Tom McKillop, its former head of investment banking Johnny Cameron and Guy Whittaker, its former finance director. The letters are also being sent to 15 further ex-directors of the bank, including former Treasury mandarin  Sir Steve Robson and Peter Sutherland, chairman of Goldman Sachs International and a former chairman of BP – and the Gogarburn-based bank itself. The shareholders believe that RBS and its former directors made “misleading statements” and “critical omissions” in April and May 2008 that gave a false and misleading picture of the bank’s financial health. The action group’s legal advisers, Bird & Bird and Philip Marshall QC of Serle Court Chambers, declined to comment. Proceedings are expected to be heard in the High Court in the early summer dependent on the response of RBS and its former board. - 12 March 2102 The Herald

IBAS Comment: Bankers are not best known for their truthful statements and there is no surprise in this allegation which is based on huge losses by bank shareholders. Whether the Shareholders Action Group will obtain redress or restitution will be of interest to many.

Banks to write to all PPI victims. Millions of people who may have been mis-sold Payment Protection Insurance are to receive letters telling them they may be eligible for compensation. The Financial Services Authority is expected to tell banks what the letters should say, in a move that is likely to trigger an estimated £3bn worth of additional claims. – 6 March 2012 BBC News

- Not before time.

Now - we all know it was Barclays! - 28.02.12

Bank tax dodges halted by retrospective law - A bank in the UK has been forced to pay more than half a billion pounds in tax which it had dodged by using "highly abusive" tax avoidance schemes. One tax dodge involved the bank claiming it should not have to pay corporation tax on profits made when buying back its own IOUs. The government said it would change the law retrospectively and immediately to stop anyone else using the scheme. The identity of the bank has so far not been revealed.

Announcing the crackdown, the Exchequer Secretary to the Treasury, David Gauke, said the bank should never have devised the schemes in the first place. "The bank that disclosed these schemes to HM Revenue & Customs (HMRC) has adopted the Banking Code of Practice on Taxation which contains a commitment not to engage in tax avoidance," he said. "The government is clear that these are not transactions that a bank that has adopted the code should be undertaking. "We do not take today's action lightly, but the potential tax loss from this scheme and the history of previous abuse in this area mean that this is a circumstance where the decision to change the law with full retrospective effect is justified," he added.

The second tax avoidance scheme, designed by the same bank, involved investment funds claiming that non-taxable income entitled the funds to tax credits that could be reclaimed from HMRC. The Treasury described this as "an attempt to secure 'repayment' from the Exchequer of tax that has not been paid". A Treasury source suggested that outlawing the tax dodges immediately would save the government a further £2bn in tax that would otherwise have been foregone. The banking code on taxation  was first introduced by the Labour government in June 2009. It followed reports that some big banks used large scale tax avoidance schemes involving complex transactions and financial instruments. It says they should not go out of their way to avoid tax for themselves or clients. The 15 biggest banks operating in the UK have signed up. In a separate development, HMRC said it would appoint a senior official to act as an "assurance commissioner" for any tax deals struck with big companies for more than £100m. The job of the commissioner will be to make sure taxpayers in general do not suffer from any such settlements. - 27 February 2012  

IBAS Comment: So, which bank is this then? Yet another example of bankers believing they are outside the law?

£1.9bn has been paid in compensation to people mis-sold Payment Protection Insurance. The Financial Services Authority (FSA) has revealed that £1.9bn has been paid in compensation to people mis-sold Payment Protection Insurance. PPI was supposed to cover loan repayments if someone lost their job or fell ill, but thousands were mis-sold the policies. Jason Billingham was one of those mis-sold PPI and he told the BBC how difficult he found it to get his money back.

IBAS Comment: But, did he get all his money back? – he says it just appeared in his account – did he know that it was correct? Did he just take the banks word for it? IBAS has seen cases where the money offered by the bank was both inaccurate and/or miscalculated - and where it took a further two attempts to obtain the correct amount …and months later. The moral is: Do not accept the bank’s first ‘offer’ - unless you have seen the evidence of calculations to prove the offer is correct and properly calculated. You only have the one chance to make sure the bank pay ‘compensation’ or ‘redress’ for what is owed to you on PPI claims. - 25.02.12

Barclays clocking up over 1,500 complaints a day as its staff share £2.5billion bonuses. The bank had 281,484 customer gripes between July and December – up 12% on the first half of 2011. It blamed the surge on claims for mis-sold payment protection insurance. An Independent Banking Advisory Service (IBAS) spokesman said: “It’s coming back to bite them – although not quickly enough in our view.” All banks have to report complaints data for the second half of 2011 to the City watchdog the Financial Services Authority by the end of February.

Barclays, which published its figures in advance, said PPI complaints hit nearly 123,000 between July and December - up by 67% from the first six months - double the number for the second half of 2010. Excluding PPI, total complaints dropped by 11% to 158,492 in the second half, or 336,363 for 2011 as a whole.

Antony Jenkins, chief executive of Barclays Retail, said: “We can and will do more to improve service and go further and faster to drive down complaints. “We are aiming for further reductions in underlying complaints in the first half of 2012 as we continue on our journey to get it right first time, every time.”

Eddy Weatherill, of the Independent Banking Advisory Service (IBAS), said: “Barclays made a lot of profit from selling PPI and now it’s coming back to bite them, although not quickly enough in our view. “But I don’t think any of the banks are doing well on the complaints front, particularly when it comes to small businesses. “They have tried to ring every penny out of customers but, because of a lack of competition, people haven’t got decent choice when it comes to moving account.” – Daily Mirror 23 February 2012

Pressure growing for three more ex-RBS directors to be stripped of their knighthoods - John Mann, a Labour MP who sits on the Treasury Select Committee, said: “The precedent has been set. It wasn’t Fred Goodwin on his own who caused the problems. He was part of a team of people.”

Eddy Weatherill, chairman of the Independent Banking Advisory Group, added: “These people were sleeping while Fred drove the car over the cliff. You can’t blame one man. It’s like a football or cricket team. He may have been the captain but there were plenty of other players picking up their cheques.” Mr Weatherill is concerned the decision to strip Mr Goodwin of his title would act as a smokescreen. He said: “The danger is he becomes the scapegoat. There’s a bit of blood letting to satisfy the mob and then everyone can get back on the gravy train.”

The Financial Services Authority report on the collapse of RBS, published in December, was highly critical of Mr Goodwin’s management style. While it stopped just short of labelling him a bully, it found him “cold, analytical and unsympathetic”. And it criticised the rest of the board for failing to challenge him, resulting in “strategic mistakes being made”.

Sir Tom McKillop was chairman of RBS from 2006 until 2009. He failed to prevent the catastrophic takeover of Dutch bank ABN Amro, which brought RBS to its knees. The 68-year-old was also a director of Lloyds Banking Group between 1999 and 2004. He was knighted in 2002, for services to the pharmaceuticals industry during his time at drugs company Zeneca.

Sir Stephen Robson, an RBS board member between 2001 and 2009, also sat on his hands during the Goodwin goldrush. He was a senior civil servant until 2001, playing a key role in the privatisation of the railways. He was also instrumental in developing the public private finance initiatives which have landed taxpayers with mammoth bills for building and running hospitals. He is on the board of the Financial Reporting Council, which advises on the way firms should be run and best practice for reporting firms’ financial affairs. He is also a part-time director of Xstrata and chairman of the Public Interest Committee at accountants KPMG. Interestingly, his career details on the organisation’s website make no reference to his time at RBS.

The third culprit is City grandee Sir Peter Sutherland, who sat on the RBS board for eight years until 2009 bail-out. A former Attorney General of Ireland, he was awarded an honorary knighthood in 2004. He served as chairman of BP until retiring in 2009 but remains chairman of Goldman Sachs International, part of the US investment bank. He was also made a director of the London School of Economics despite an online petition opposing his appointment. - Daily Mirror  02/02/12

IBAS Comment - Just what is wrong with UK 'Justice' and Law systems - how can any of us continue to tolerate such obvious double standards where banks and bankers are concerned?

An email to us will obtain our speedy response - please tell us which bank is involved and the outline of the issues and what has already happened.

Call this justice? City banker steals £1.4m... no charge. Shop worker steals £10k... 9 months' jail - Vast payouts are clearly not the only bonus you get being a fatcat banker – you also apparently get away with fraud scot-free. A City firm was yesterday accused of protecting a financier who stole £1.4million so he would not go to jail. Ravi Sinha, 47, was fined nearly £3million by the City watchdog for fraud but escaped criminal prosecution after his company JC Flowers allegedly refused to help police nail him. In a shocking contrast exposing the double standards protecting the rich, a shop worker who allowed friends to steal £10,000 worth of goods – a fraction of what the banker took – was last year jailed for nine months.

Eddie Weatherill, chairman of the Independent Banking Advisory group, was amazed Sinha was not being put before the courts. He said: “For some reason we often find there’s a real lack of determination to criminally prosecute bankers who have done wrong.”

Tracey McDermott, of the FSA, said: “Sinha exploited his position of trust as CEO to fraudulently obtain significant sums for his personal benefit. “ He engaged in a dishonest, deliberate and sustained course of misconduct which lasted for several months. Such behaviour has no place in the financial services industry.” JC Flowers stressed it had found the problem itself and the FSA had not criticised its systems or controls. A spokesman said: “Neither the company that paid the invoices nor investors in the funds advised by JC Flowers have suffered any loss as a result of Mr Sinha’s actions,” Last year, Ikea worker Colin Kenny, 20, was jailed for nine months for allowing friends and relatives to leave the company’s Belfast store without paying for £10,000-worth of goods. - Daily Mirror 02/02/12

Should Fred Goodwin be stripped of his knighthood? - link to Question time answers to that question - IBAS Comment: Our answer is that of course Fred Goodwin should be stripped of his knighthood - and also without any further time loss (after 4 years already debating it). It's a complete nonsense that he has retained his knighthood and been allowed to 'trade off it' for his future employment. He was given the knighthood for services to banking - equally his conduct in leading a major bank onto the rocks evidences not only his but also his complete team's disservice to banking and the whole UK population. Common sense and forward thinking should mean that Government will make an example of Fred Goodwin and remove his knighthood in return for the conduct which has tipped the whole UK financial services into chaos. We doubt there is any UK business now forced to struggle in order to just maintain it's solvency - which would not support a Government motion that Fred Goodwin should now be stripped of his knighthood. - 21.01.12

Branson backtracks on his £60 bank fees after takeover of Northern Rock - Sir Richard Branson has dropped plans to impose compulsory fees of £60 a year on current accounts following Virgin Money’s takeover of Northern Rock. The U-turn comes after the proposed charges – even on customers who never stray into the red – were revealed by the Mail. Sir Richard now says his bank will offer the choice of free current accounts as well as the fee-charging accounts, which are likely to offer perks such as discounts on Virgin flights or gym memberships. Consumer groups say bank accounts offering these ‘benefits’ are usually poor value for money. Critics said that the billionaire’s back-tracking was a victory for the Mail.

Eddy Weatherill, of the Independent Banking Advisory Service, said: ‘It is good news that the Daily Mail has been pushing on this. ‘At the moment nobody trusts bankers. We need good standards of service and ethical behaviour to change that.’ Campaigners had feared that Virgin Money’s move would lead its rivals to follow suit and stop offering free accounts. Sir Richard said it would be ‘very unwise’ to offer only fee-charging current accounts and that Virgin would give customers a choice. Virgin Money is taking over 75 Northern Rock branches, 21,000 staff and a £14billion mortgage book. The enlarged bank will have four million customers. – Daily Mail 11/01/12

IBAS Comment: A change of mind in the right direction is always good. UK Banking needs new and better entrants and Virgin's 'mission' statement does offer some promise for the future. Its interesting to see what we were saying about Virgin Money in 2007 which was that: Sir Richard Branson's Virgin Group is planning to take a majority stake in Northern Rock, so the BBC has learned. Virgin Money has for some time been interested in banking and mortgages. Is Northern Rock going to be the foundation on which Virgin Money builds? Is Northern Rock's mortgage portfolio Virgin's entry point into creating a bank of it's own - or is this another PR exercise whilst the Government continues to 'shore' Northern Rock up until the most palatable solution is found? As they say - you couldn't make it up, could you? - at 12.10.07

Bank with Branson? That'll be £60 a year - IBAS Comment: We do not like current accounts which charge monthly fees - simply because they also provide the bank with a sales opportunity for all their own banking products and are therefore somewhat 'captive' to the bank's sales tactics - fair or otherwise. But the good news is that this is a new entrant to the High Street banking branch arena with a past track record of providing good customer service - which is a bench mark all and every bank should aspire to and which many do not provide. IBAS are hopeful this new entrant will provoke some original and better ideas, not just in marketing - but also in providing what they state 'on the tin'. We look forward with hope and trust we may provide a 'pat on the back' later - once we have assessed their contribution to this market! - 09.01.12

Clydesdale slips below Santander to bottom of the bank happiness league as First Direct dominates - First Direct, Co-op and Nationwide are Britain 's three favourite banks, according to a major new poll, but Clydesdale Bank has slipped below Santander to the foot of the rankings. This time around, First Direct scored 77%, the Co-op 73% and Nationwide 72% for satisfaction among the 3,899 person-strong survey. With Clydesdale Bank at the other end of the league table. The Scottish-based bank, owned by National Australia Bank, was third-bottom in 2010 but has crashed below Santander to foot the table this time around.

IBAS Comment: Not too surprising from what we have seen during the last year. Clydesdale showed all the signs of a bank with internal issues and staff problems which also shows they need to learn important customer service lessons - and quickly. If new entrants Virgin and an enlarged Co-op live up to IBAS expectations - Clydesdale may have a lot to lose! Santander needs to improve more - but signs are there as the decision to bring call centers back into the UK and improving training with higher staff numbers begins to make an impression.- 09.01.12

David Cameron blasted over knighthood for man who made millions from Northern Rock collapse - David Cameron was under increasing pressure yesterday after a Tory donor – whose firm made at least £100million betting against Britain’s stricken banks – was knighted. Paul Ruddock’s gong in the New Year Honours List was condemned by politicians and campaigners. His hedge fund company Lansdowne Partners made around £100million by betting that Northern Rock’s share price would fall in 2007 and made millions more from moving shares in other troubled banks. Ruddock, 52, who has donated more than £500,000 to the Tories since 2003, was knighted for services to the arts.

IBAS Comment: Anything that sends out a message to the British public that greed is to be rewarded is completely wrong and also counter productive. Why should ordinary people accept they need to draw their 'belts in' and their children go without and also suffer hardship because of the dire state of UK banking and finance being unavailable at the right price to small businesses - when someone like this is rewarded for profiteering? The message and the reward are both wrong - nothing can make either right now ! - 02.01.12


Independent Banking Advisory Service (IBAS) - launched in 1992 as a specialist business banking membership organization assisting bank customers with UK business banking account loan disputes and business banking debt disputes with their bank. Our analysis and investigation of business bank loans, bank accounts, banking contracts, business banking account facilities and banking debt recovery information has been instrumental in our member's success.

IBAS business banking dispute negotiating experience provides proven strategies for business bank customers banking claims and defences. IBAS has excellent banking investigation reputation and IBAS has featured on BBC TV, BBC TV News, ITV, Meridian and Sky News and contributed to editorials and articles for the Sunday Times, Times, Daily Mail, Daily Express and Daily Mirror - see Business: Your Money Not a moving account  - BBC 22/07/99


Last modified: 27th March 2018