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Banking News & UK Comment 2012


Banks are 'too big to prosecute', says FSA - The 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 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.”

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. 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: 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!

New UK "business bank" is being set up to boost lending to small and medium-sized firms, Business Secretary has announced. The plan, billed by the Lib Dems as a "big win", 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. 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 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.

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," - "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, and "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 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 -“ 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 - August 14th 2012

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. New details from court documents and sources suggest that groups of traders working at three major European banks, including RBS were heavily involved. 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.

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, he 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. He 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 the 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: He said: ‘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.’ 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 he is saying - because we are aware from over 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. The HBOS whisteblower is a trained barrister and he 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: 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 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 that will see it write-off swaps and loans worth €30m as well as covering his 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?

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?

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.

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

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.

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? The US Regulator 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 : ‘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:These people 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.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 Banking Review - 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 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. The 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.

Farepak trial collapse: who's to blame? - Speaking after the disqualification case against the Farepak directors collapsed on Wednesday, the judge who is overseeing it, 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,” he said.

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 them to call on HBOS, now owned by Lloyds, to top up a £2m payment it made to the Farepak depositors’ compensation fund. “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”was damning. He blamed HBOS for the debacle. 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 he 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. The Judge 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 the Judge 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.

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 -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. ‘The problem, 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.

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," he said. 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 - 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 - Former Royal Bank of Scotland chief executive 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 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 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, 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?

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.

The 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

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

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 in 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: 23rd September 2018