Independent Banking Advisory Service
Established in 1992
Banking News & UK Comment 2015
(Please use the 'headline link' to read full articles at their source).
IBAS is now in it's 25th year helping/guiding those with UK Business Banking disputes and Director's Personal Guarantee business debt claims - IBAS is the only UK non profit organization which provides business banking customers with specialist business banking assistance and specialist business banking guidance and also IBAS specialist business banking investigations.
Banking culture inquiry 'shelved' by FCA - The City regulator, the Financial Conduct Authority (FCA), has shelved it's plans for an inquiry into the culture, pay and behaviour of staff in banking. The FCA had planned to see whether pay, promotion and other incentives contributed to misconduct seen in previous years. The review was meant to be a major piece of work by the watchdog. - BBC Business News 31st December 2015
Eddy Weatherill said: "Banks should feel pleased by the 'series of moves perceived as bank friendly in the last year' mentioned in this article. Particularly, when Martin Wheatley, a fierce critic of the banks and former chief executive of the FCA was 'eased out' of his position by the Treasury. Bank consumers have now lost their best ally and the government appears bent on another attempt at 'light touch regulation. It didn't work before and banks will perceive weakness now - so most unlikely to work now. The best chance for a complete reform of the banking industry appears now lost for good. - 31st December 2015.
IBAS launched in 1992 as a specialist business banking organization to help those with business banking debt disputes and to analyze and investigate business bank accounts and banking information. IBAS business banking dispute negotiating experience has a proven strategy which provides claims and defences for business bank customers. IBAS has excellent banking investigation reputation and 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.
Andrew Bailey, Deputy Governor of the Bank of England, CEO of the PRA and Accountable Executive for the HBOS Review said:“The story of the failure of HBOS is important both to provide a record of an event which required a major contribution by the public purse, and because it is a story of the failure of a bank that did not undertake complicated activity or so-called racy investment banking. HBOS was at root a simple bank that nonetheless managed to create a big problem.”
Report into the FSA’s enforcement actions following the failure of HBOS By Andrew Green Q.C. (full report download)
Eddy Weatherill said: This Report has been just too long coming. Many will now trawl through the report and find interesting 'snippets'. No doubt those already in litigation, will see from the report that 'light touch regulation' just didn't work. Because, this bank and importantly all other banks at that time, were allowed by the regulators to continue with allowing very lax management to oversee inadequate and out of date systems for recording and analyzing their own financial position. What this shows me - is that this bank lacked any real ability to manage itself properly well before it actually collapsed. So, even more worrying when Andrew Bailey says that HBOS: 'did not undertake complicated activity or so-called racy investment banking. HBOS was at root a simple bank that nonetheless managed to create a big problem.” The annexe 4 document is the signed Enforcement Referral Document (ERD) dated 26th February 2009 - this is particularly interesting to me as it evidences the complete inability of HBOS to know, chart or analyze the actual position within the HBOS Corporate Division from early 2007. The FSA described these as 'weaknesses' and these 'weaknesses' were apparently fully identified by the FSA by 17th October 2008.
On the question: Has there been actual or potential consumer loss/detriment? The answer was: 'Without the announcement of the takeover by Lloyds and extensive Government/Bank of England liquidity support, the firm was at risk of collapse with potential detriment to customers.'
On the question: 'Is there evidence of financial crime or risk of financial crime? The answer was: 'Yes. There was a potential risk of fraud and financial crime arising from poor systems and controls'. From what we and others have seen, financial crime prospered from the bank's poor systems and controls. That's why many HBOS customer's businesses were destroyed. But, despite all the business failures only one HBOS senior employee has been properly reprimanded. - 20th November 2015
Eddy Weatherill said: 'Lack of trust in banking escalated after claims by consumers and business for repayment and restitution were 'resisted' by the banks and then PPI sales became news worthy. The PPI 'bill' is now way beyond IBAS's original forecast. To me it illustrates the size of PPI profiteering by the banks. The FCA has to some extent 'adjusted' the balance between banks and banking consumers and many banking consumers will have received some redress for PPI. But, as the articles above illustrate banks do not 'play fair'. What is worse, is that they attempt to cheat even after the FCA has caught them 'with their hands in the consumer's pockets. Fines alone do not prevent such internal 'advice' impacting detrimentally on consumers. So, at this moment in time, whilst the FCA has made considerable impact on banking excesses, which we welcome, lack of trust in banking remains. In my opinion that lack of trust will remain until the UK bank consumer, whether personal or business, can see the FCA enforcing all aspects of banking customer procedures and banking relationships. UK Bank debt recovery units and procedures appear to have so far escaped FCA's notice, although in my opinion there is a specific area of bank profiteering from Director's personal guarantee debt claims and bank mortgages taken to support PGs which needs FCA close investigation/s - because that is where bank customers remain at considerable risk'. - 9th September 2015
Lloyds hit by record £117m fine over PPI handling. State-backed Lloyds Banking Group has been fined a record £117m for mis-handling payment protection insurance (PPI) complaints by the City watchdog. It is the latest fine imposed on the bank, in which the taxpayer still holds a 19% stake. It comes just two months after Clydesdale Bank was fined £20.7m for similar failings. Last year, Lloyds was fined £218m by the Financial Conduct Authority (FCA) and US regulators for its part in the rigging of international banking lending rates.The latest fine relates to the way in which Lloyds advised its own complaint handlers to deal with customer demands for PPI refunds. The FCA said the bank dealt with 2.3 million PPI mis-selling complaints between March 2012 and May 2013. Lloyds rejected 37% of those complaints out of hand. Call centre staff in March 2012 were advised that the bank's sales processes were compliant with regulations and that they were to deal with complaints on this basis unless otherwise informed. As a result, the FCA said "a significant number of customer complaints were unfairly rejected". The mis-handling of complaints first came to light as a result of an undercover investigation by journalists from the Times newspaper, although the FCA was already investigating the bank over perceived failures in PPI complaint handling. Lloyds has set aside a further £710m to cover any redress due to affected customers. In total the bank has set aside £12.025bn to refund customers for PPI mis-selling. Customers do not need to take any action. Those who are affected and entitled to redress are being contacted directly. The FCA added that it was overseeing the remediation process. - 05.06.15 - BBC News & Business – Also see the BBC news report below:
Banks' PPI bill now £24.4bn according to Which?The bill for the mis-selling of payment protection insurance (PPI) by the five biggest banks in the UK has now reached £24.4bn, says consumer group Which? The amount set aside for PPI mis-selling detailed in banks' annual results released in February & March 2015 showed that Barclays provision increased by £200m in the last three months of 2014, taking the year's total to £1.1bn. Santander added another £30m.Lloyds, partly owned by the taxpayer, set aside a further £700m over the same period, bringing its total for the year to £2.2bn.RBS, which is majority-owned by the taxpayer, made an additional £400m provision, to bring the total for the year to £650m, while HSBC allowed an additional £278m taking its total for the year to £624m. All these amounts come on top of billions of pounds which have been set aside by the top banks in previous years. - 03.03.15 BBC News
Statement on Plevin v Paragon Personal Finance Ltd - 'In November 2014, the Supreme Court ruled in Plevin v Paragon Personal Finance Ltd (Plevin) that a failure to disclose to a client a large commission payment on a single premium PPI policy made the relationship between a lender and the borrower unfair under section 140A of the Consumer Credit Act 1974. As a result, the FCA is considering whether additional rules and/or guidance are required to deal with the impact of the Plevin decision on complaints about PPI. The FCA will be engaging with relevant stakeholders in the coming months in respect of this and it expects to announce its views on this, including next steps, at the same time as existing work'. - 27/05/2015 - Published by the FCA
Conduct and Litigation charges a 'way of life' for British Bank - according to Standards & Poor 'conduct and litigation charges for the four biggest lenders will peak at almost £14bn this year before falling sharply' and 'up from slightly more than £10bn last year'.The biggest single conduct issue for UK banks has been the cost of compensating customers for miss-selling payment protection insurance, which S & P said cost the industry £26bn in charges. Lloyds Banking Group has paid more than £14bn in conduct and litigation charges in the past five years - more than any other UK bank. Most of that was for PPI compensation. S&P said provisions for mis-selling of interest rate hedging products had cost the banks almost £5bn in the past three years, but they estimated "future provisions should be modest" because banks think they have identified most cases.- 27th April 2015 The Financial Times
Eddy Weatherill said: S&P's comments in the Financial Times article evidences the very high cost of PPI - particularly on Lloyds Banking Group. But, those costs are now dropping as PPI compensation claimants also drop. S&P say that 'mis-selling of interest rate hedging products had cost the banks almost £5bn in the past three years, but it estimated that "future provisions should be modest" - because banks think they have identified most cases. That to me, points to the banks believing that they have almost 'beaten off' that specific attack on their profits, despite the many litigants still waiting and attempting to gain compensation for the various bank's 'mis-selling' of those products. Recent case law in that area also suggests that the Courts have been 'helpful' to the banks. That makes me wonder whether the banks have again managed to use 'political pressure/s' in gaining the judgments that they have? - 15th September 2015
UK Bank Customer's Class Actions and UK Bank litigation in 2014 - an overview of possible class actions.
Eddy Weatherill comments: 'Our web site at SFLGS & EFG warns, that: 'If you're presently contemplating an Enterprise Finance Guarantee it is not the quality of your business plan which should concern you most but whether the proposition you are seeking to borrow against is really 100% viable. Your proposal should not be overly optimistic but realistically priced (with a sensible margin allowed for error) so that it can truly survive any possible delays in initial funding, lack of banking expertise, lack of Enterprise Finance Guarantee knowledge and also the possibility of opportunistic bankers subverting the scheme for their own purposes and taking personal guarantees to plunder the individuals - later if required - as we are seeing now - see Business Banking Solutions - The news items below evidence what IBAS already knew also that it is not just RBS that has used this scheme (or the last SFLGS) to feather their own 'banking nests' at Government expense but most importantly the bank's 'plundering' has been at the expense of many small businesses being let down and then destroyed - 16th January 2015
RBS admits Mis-selling Taxpayer - Backed Scheme Royal Bank of Scotland (RBS) is contacting 1,800 small business customers who are believed to have suffered under the latest mis-selling scandal to hit the bank.RBS said the issue came to light following a review of customer files following complaints to the British Business Bank, the Government body overseeing the Enterprise Finance Guarantee (EFG). The scheme, set up in 2009, has seen RBS loan more than £900m to 9,000 small firms who would otherwise have found it difficult to access credit. The EFG provides a 75% Government guarantee to lenders willing to back viable small businesses to aid the economy. Some RBS customers were incorrectly led to believe that the guarantee was for their benefit rather than the bank's - and did not realise that they remained liable for 100% of the loan.The affair is the latest damaging episode related to the lender's treatment of small business customers after it was previously accused of pushing firms to the wall so it could buy back their assets at rock-bottom prices.- Sky Business News on 15th January 2015
RBS admits mis-selling business loans - Some RBS customers were led to believe the guarantee was for their benefit, rather than to increase banks' willingness to lend, and did not realise they remained liable for all of the money. RBS reviewed a sample of EFG customer files - this exercise "identified a number of instances where we have not properly explained to customers how borrower and guarantor liabilities work under the EFG scheme". The bank said it would be implementing a "thorough and proactive review of affected and potentially affected customers to ensure they are put back in the position they believed they would have been in". The Financial Conduct Authority has been informed of the issue. RBS is contacting about 1,800 EFG loans customers who took out a loan under the scheme and either defaulted or found themselves in a "stressed" financial position. - BBC Business News on 15th January 2015
Thousands of HSBC customers are to share a £350 million payout - because of a documentation blunder – even if they have not lost out. The bank failed to remind them of their right to partially repay their debt early, breaking banking rules. A spokesman said: “We do not believe our customers suffered any detriment as a result but we decided to refund interest they paid from the time we should have told them of that right.” HSBC is contacting customers who took out loans between October 2010 and July 2014. It refused to reveal the average payout. Eddy Weatherill of the Independent Banking Advisory Service said: “It’s quite remarkable that a bank such as HSBC should find itself in this position with all the regulatory checks in place.” - 11th January 2015 article by Stephen Hayward