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Banking News|UK Comment 2016

(use the 'headline link' to read full articles at their source)


UK Banking News and IBAS Comment Archive


Banks MPs and Government



Millions of people who have basic bank accounts may be paying higher fees than necessary - While eight million people have basic accounts, around half of them are still liable to pay fees for failed payments. The Treasury figures show that 3.7 million people have accounts that do not conform to the agreement, struck between the government and the banking industry, in 2014. Of those, 3.6 million bank with Lloyds. Only 4% of those who have basic bank accounts with Lloyds have access to the cheapest banking terms, the figures show. On 'Financial distress' "These figures are shocking, but sadly not surprising," said editor in chief of Money.co.uk. "Swift intervention is clearly necessary if banks can't be trusted to treat their most financially vulnerable customers fairly." Royal Bank of Scotland (RBS) is the only other bank where some basic account customers have to pay fees. - BBC Business - Personal Banking - 12th December 2016

So, the fact that Lloyds set up such accounts to 'fleece' vulnerable people (whilst not surprising IBAS either) - evidences lack of (or no) proper regulatory control - that must be corrected very quickly - let's hope that happens before Christmas! - Eddy Weatherill on 12th December 2016


Eddy Weatherill says: Having now seen the first of the RBS letters on 'Putting things Right' which are now following the bank's announcement that they would be 'creating a new complaints process overseen by retired High Court Judge.' It does appear that the first steps are being taken for that process. So far, so good. But, as I've said before, the devil is in the detail. We know from the SWAPS 'reviews' that it was the 'devil in the detail' which then allowed RBS to avoid the additional losses claimed by many businesses - although they were using legal advisors (their legal advisors still did quite well from the fees) - and the fact that it was GRG 'excesses' and fees which had created many of those losses. Maybe, this 'new complaints process' will allow redress - but we have not seen a bank pay out without good evidence and reasoning and have seen many cases which have failed despite high cost legal representation. A good case with good reasoning and evidence is now vitally important for what may be the last opportunity for many businesses to gain redress. The same applies where there is a a home or property at risk and the need to make a reasonable negotiating position instead of the bank taking all they claim through their Debt Recovery Department. The 'strength' of the customer's case is even more necessary if legal representation is unaffordable (and it is very costly) or the case is just not large enough to justify ILA or in obtaining the necessary counsel's opinion to gain litigation funding to start that process to pursue the bank for their claims. IBAS has helped many gain results which otherwise would have been impossible - so don't be too proud to ask IBAS for help. - 12th December 2016

Eddy Weatherill says: Royal Bank of Scotland (RBS) has agreed a settlement with three out of five shareholder groups (after 8 years) and is forced to 'minimise further material litigation expense' which in 'bank speak' means the balance had tilted in favour of the opposition and maybe for once the litigation funders were not prepared to put more money at risk. Along with the news that RBS "remains susceptible to financial and economic stress" means this bank is weak and still at substantial risk from further litigation both here and abroad. - 5th December 2016


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RBS settles shareholder lawsuits as part of £800m deal - Royal Bank of Scotland (RBS) has agreed a settlement with three out of five shareholder groups currently suing the bank for compensation. The claims relate to a £12bn fundraising drive which RBS undertook in 2008, just months before it had to be bailed out by the British taxpayer to the tune of more than £45bn.

As previously reported by Sky News, the bank has set aside £800m to pay the claims of all five shareholder groups. According to RBS, it has agreed the settlements to "minimise further material litigation expense and management distraction" and has done so without any admission of fault. - Sky News - 5th December 2016

RBS settles three claims over 2008 fund raising - Royal Bank of Scotland (RBS) has reached a deal with three of the five shareholder groups who allege they were misled over the bank's £12bn fund raising in 2008. RBS said it had reached a "full and final settlement" with the three, and would now seek to agree terms with the two remaining groups. Investors argued they were misled over RBS's health, and so bought shares just months before it was bailed out. RBS has set aside a total of £800m to settle all the claims.

Last week, stress tests run by the Bank of England found that RBS was the worst prepared of the UK's biggest lenders to cope with another financial crisis. The results forced RBS to devise plans to bolster its balance sheet by £2bn through cost cuts and shedding assets. - BBC Business News 5th December 2016

Eddy Weatherill says: The bank has issued denial after denial - year on year - preventing the 12,000 business customers from running their own business, whilst also taking many of those businesses away (by one means or another) and many small businesses have lost their personal assets due to this bank. No wonder many SME's have resorted to legal claims in joining lawyer led 'class actions'. But, at IBAS we also know that the greater number of those small businesses cannot join into such legal claims because their claims are not 6 figure plus claims.

We look forward to 'understanding' just how the RBS will 'refund complex fees paid by about 4,000 small business GRG customers between 2008 and 2013' and will be watching carefully to see whether those refunds are correct and also allow for the time involved. But, the greater issue is on the related SME losses which will need to be 'fought for' individually because the bank does not just 'give back' money to customers when they can avoid it. Our members have IBAS support and knowledge for those issues. - 8th November 2016

RBS to compensate squeezed firms - Royal Bank of Scotland (RBS) is to compensate up to 12,000 small business customers that it allegedly mistreated in the wake of the financial crisis. The bank has announced a fund of £400m for affected firms. Its Global Restructuring Group (GRG) had been accused of buying assets cheaply from failing firms it claimed to be helping. However, regulators found RBS did not "artificially engineer" the transfer of customers to GRG. Last month, RBS said it had let some small business customers down in the past but denied it had deliberately caused them to fail.

The bank will automatically refund complex fees paid by about 4,000 small business GRG customers between 2008 and 2013, and will set up a new complaints process. The process will be overseen by retired High Court judge. Complaints will initially be dealt with by the bank, and any that are not resolved will then be considered by the third party. In the case of businesses that have gone bust but are due compensation, it will be up to administrators to decide whether to reconstitute the firm, said RBS regulatory affairs officer. It may be the case that only creditors of a dissolved firm will benefit from any compensation, rather than the business owner, he said.

On Tuesday, the FCA said in it's FCA Statement that it found there was no widespread practice of transferring customers to GRG for their value, or requesting cash injections when the bank had no intention of supporting the business. Small businesses that were transferred to GRG "were exhibiting clear signs of financial difficulty," the FCA said.

However, the bank did fail to support businesses "in a manner consistent with good turnaround practice", including "placing an undue focus on pricing increases and debt reduction without due consideration to the longer term viability of customers". RBS's announcement coincides with the appearance before the Treasury Select Committee of Andrew Bailey, FCA chief executive. - BBC Business News 8th November 2016

8th November 2016 FCA News page

RBS sets aside £400m to repay small business customers - Royal Bank of Scotland is setting aside £400m as it repays fees to small business customers after claims of mistreatment. The lender made the announcement, confirming a Sky News report, as it said it was putting in place a new complaints process over its controversial Global Restructuring Group (GRG).

GRG was meant to help struggling business customers but it has faced allegations - denied by the bank - that it forced them into positions of financial distress in order to benefit its own position. However chief executive Ross McEwan conceded that mistakes were made during the period, with some customers going through a "traumatic and painful experience".

The latest announcement by RBS comes as the Financial Conduct Authority (FCA), the City regulator, delivers an update on its ongoing review of the former unit between 2008 and 2013.RBS ceo said: "I am very sorry that we did not provide the level of services and understanding we should have done."We believe that now is the right time to deal with the areas where we accept some customers were let down in the past." A new complaints process will be led by retired High Court judge. - Sky News 8th November 2016

RBS to repay more than £300m in fees to former SME customers - The state-backed bank will set aside close to £400m for repaying fees to struggling business customers, Sky News learns. Insiders said the announcement of the remediation programme was being timed to coincide with the appearance before the Treasury Select Committee of the Financial Conduct Authority (FCA) chief executive. He has come under intense pressure from the committee‎ chairman, to publish the results of an independent probe into GRG's conduct. RBS' chief executive, said last month that the bank rejected allegations that GRG had forced business customers into positions of financial distress in order to benefit its own position. - Sky News 7th November 2016

RBS reports £469m loss in third quarter - Royal Bank of Scotland reports a third quarter loss, with its earnings hit by ongoing litigation and restructuring costs. Royal Bank of Scotland has reported a third quarter loss of £469m, setting aside £425m for litigation and conduct costs. The lender, which remains 73%-owned by British taxpayers more than eight years after its £45.5bn bailout, has not made an annual profit since 2007. This leaves the Government currently sitting on a £25bn-plus loss on its investment.RBS's third quarter loss is compared with a profit of £940m in the same quarter last year, although that result was skewed by the sale of substantial businesses in the US. Also, on Wednesday, Sky News revealed that RBS had been forced to set aside millions of pounds to settle legal action brought by major City shareholders. The bank is facing at least five separate claims from sets of investors who allege that they were misled into buying shares in the bank in April 2008. - Sky News 28th October 2016

Eddy Weatherill comment: Now we can begin to see the absolute enormity of the PPI scandal and also why the banks were so keen to hide how they had 'robbed' their customers by selling PPI when they knew it was being used mainly to feed the bank's profit and that otherwise PPI was pretty much useless for the majority of their customers. Such a scam! We knew it would be a big 'issue' because the banks and the FOS resisted the early claims for payment. Just as they did for SWAPS. - 19th October 2016

Banking giants to add £2bn to PPI bill despite payout slowdown - The quartet of banks - Barclays, HSBC, Lloyds Banking Group and Royal Bank of Scotland - have already set aside a mammoth sum of more than £30bn for compensating victims of mis-selling and administering claims.

Sources close to the banks confirmed that they would add to their existing PPI provisions ahead of formal confirmation from the City watchdog that a 2019 cut-off point will bring an end to Britain's biggest consumer mis-selling scandal.

The Financial Conduct Authority (FCA) has been conducting a consultation on the so-called timebar exercise, with submissions by interested parties made earlier this month.

The big banks had hoped to have already set aside sufficient funds for PPI mis-selling but have been forced into a rethink because the likely FCA deadline for claims is a year later than anticipated. Lloyds, which had by far the biggest share of PPI policies, has already been forced to fork out more than £16bn over the issue. Analysts at Autonomous Research, projected last year that banks could face a separate £33bn bill if the Plevin judgement was extended to other financial products - Sky News 18.10.16

Eddy Weatherill comment: The FCA has 'fallen upon' a banking 'recovery scheme which has been generating extra profit from debt and making more money out of distressed customers. A whistle blower, perhaps? Our experience is that banks will 'take' wherever they can with little regard for the customer or the regulator. Recoveries has been a concern of mine for a long time because the FSA and the FCA has appeared to ignore what the banks were doing 'out of sight' and particularly where 'distressed customers' were concerned. These 'rip offs' have been going on for a very long time - so it's good to see one 'loop hole' which may now be closing - hopefully those that have been 'overcharged' will now get it returned? - 19th October 2016

FCA says 750,000 mortgage customers could get compensation payout A potential blunder by lenders means thousands could be in line for compensation, the Financial Conduct Authority says. Hundreds of thousands of mortgage customers could be in line for compensation. The Financial Conduct Authority (FCA) said its work with an industry group had identified a "likely" breach of industry rules. The watchdog said it believed lenders had been collecting arrears over the remaining mortgage term through a higher monthly payment while continuing to pursue the money as immediately payable through their collections processes. It believes around 750,000 customers may be affected by the issue of lenders automatically lumping arrears balances in with customers' monthly payments - Sky News 19.10.16

RBS GRG & FCA investigation into GRG activities and customers losing their business and their assets

13th October 2016

1.1 In 2013, the Parliamentary Commission on Banking Standards (PCBS) recommended that banks put in place mechanisms to allow their employees to raise concerns internally (i.e. to ‘blow the whistle’). The Commission also recommended that banks assign the responsibility for overseeing the effectiveness of those arrangements to a senior person.

1.2 In October 2015, the FCA and the PRA introduced new rules requiring internal whistleblowing arrangements to be introduced by banks, building societies, credit unions and PRA-designated investment firms (collectively known as Relevant Authorised Persons, or “RAPs”), as well as insurers. (source FCA web site)

BBC Newsnight on 10th October 2016 - provided an exclusive RBS investigation and evidenced internal papers obtained from a ‘whistleblower’ regarding RBS Global Restructuring Group (GRG).

RBS destroyed customers' businesses for profit suggests leaked files

Mastercard facing £19bn damages claim over inflated card charges - The Company is alleged to have set unlawfully high fees for using cards in shops over a 16-year period The claim, led by former financial services ombudsman – who has instructed US-based law firm Quinn Emanuel, is to be filed under the Consumer Rights Act 2015, which allows for collective damages claims. He said in a statement: 'The prices of everything we all bought from 1992 to 2008 were higher than they should have been as a result of the unlawful conduct of MasterCard. There is no question that MasterCard acted illegally in the way it conducted its business, a business that affects all of us. All of us over-paid to the tune of up to £19bn during a period lasting 16 years. My aim is to get the redress to which UK consumers are entitled and to ensure that MasterCard cannot hold on to the illegal profits it made. This case should send a signal to companies that break competition laws at the expense of UK consumers that they do so at their financial peril.'

MasterCard faces £19bn collective action over card charges - Millions of Britons could collect more than £450 each in a landmark legal case against MasterCard over a £19billion rip-off. The case revolves around the charges imposed by MasterCard on retailers for processing credit and debit card payments over 16 years. These 'interchange fees' were passed on to all shoppers regardless of whether they were MasterCard customers or not in higher prices on everything from a pair of shoes to the weekly groceries. Now the UK's former Chief Financial Ombudsman, is leading a class action lawsuit to get consumers their money back. - Daily Mail 05.07.16

US warns banks of hacking threat to Swift system -  07.06.16 BBC Business News


Bangladesh hack 'targeted bank system -  25.04.16 BBC Business News & BAE Systems blog - 25.04.16


IBAS Comment: The most recent attack on the Swift system shows how easily the banking payment system can be compromised. Fortunately, it was not totally successful but the scale of the attack shows just how much such systems are going to be targeted in the future by utilizing even the smallest 'weak link'.


Barclays shares closed down 7% after reporting a drop in full-year profits - plus a dividend cut and a restructuring including reducing its stake in Africa. - 1st March 2016 BBC Business News

Barclays annual profits fall 8% to £2.1bn - as the bank takes a fourth quarter hit of £1.45bn for PPI and sees its total bill for conduct and litigation in 2015 swell to £4.4bn. - Sky Business News 1st March 2016

RBS Shares Slide as losses continue - Royal Bank of Scotland has reported a loss of £1.98bn for 2015, its eighth year of annual losses - partly due to £3.6bn for litigation costs, including £600m to cover claims over the mis-selling of payment protection insurance. The bank, which is still 73% government owned, set aside £2.9bn for restructuring.Once these costs are stripped out, RBS recorded a £4.4bn underlying profit, down from £6bn a year earlier. - BBC Business News 26th February 2016 

Lloyds profits fall on PPI claims - Lloyds Banking Group has reported a 7% fall in annual pre-tax profits to £1.6bn compared with £1.8bn a year earlier. The bank  increased provisions for payment protection insurance (PPI) compensation in the year to £4bn. That was after the City watchdog said it was considering a deadline on compensation claims. - BBC Business News 25th February 2016

Big banks should loosen control of payments system, says watchdog - Big banks should loosen their stranglehold on the system behind the way consumers pay for things to encourage innovation, a regulator says. The infrastructure behind processing payments - such as same-day transfers of money between accounts - is owned by a small number of banks. They also own the system that is used to process 90% of UK salary payments, called VocaLink. The Payment Systems Regulator now wants banks to sell their stake. - BBC Business News 25th February 2016

Bank Body UKFI To Name New Chief - The agency which manages taxpayers' stakes in Britain's bailed-out banks is to appoint a new boss as it tries to hit an ambitious target of offloading more than £25bn of shares during this parliament.Sky News has learnt that , the Chancellor, wants a former City banker, as the new chief executive of UK Financial Investments (UKFI) in the next few weeks. - Sky Business News 24th February 2016

The UK’s new breed of digital challenger banks: Atom, Mondo, Starling and Tandem – Ranked - With licensing restrictions coming down and the fintech startup scene in London booming, a new breed of digital-first, mobile-only banks are starting to get traction in the UK, but who will come out on top: Atom, Mondo, Tandem or Starling. - By Scott Carey - Feb 23rd 2016 Techworld

IBAS Comment: The established banks 'ripped off' their customers and enjoyed a profit feeding frenzy for many years - now they face retribution, restitution and reorganization as their competitors in every type of banking situation prepare better, quicker, cheaper products and services to take customers from them.

HSBC shares slide on earnings and bumpier road ahead - Shares in HSBC fell nearly 3% following a surprise fourth quarter loss and predictions of a "bumpier" road ahead because of China's slowing economy. In the final three months of last year, HSBC reported a pre-tax loss of $858m compared with a profit in the fourth quarter of 2014. For the full-year, pre-tax profit was flat, up just 1% to $18.9bn (£13.1bn).HBSC also confirmed that it is being investigated over its hiring practices in Asia.Shares in Europe's largest bank fell 2.9% to 436p in mid-morning trading, hit by the unexpected loss in the fourth quarter because of write downs on the value of loans and declining income from lending.Looking ahead, chairman said: "China's slower economic growth will undoubtedly contribute to a bumpier financial environment." Asia accounted for 83.5% of HSBC's global pre-tax profit last year. - BBC Business News 22nd February 2016

NAB falls as Clydesdale IPO priced low - National Australia Bank (NAB) shares fell 5.7% after the lender priced shares of its Clydesdale Bank at 180p, which was at the low end of estimates. The price values the UK bank at about £1.5bn ($2.2bn). The lender had delayed the listing by 24 hours to update its prospectus after a request from a ratings agency. Shares in Glasgow-based Clydesdale, which has been owned by NAB since 1987, will begin trading in London later on Wednesday. Its bad property loans mean NAB has been trying to sell the bank for several years. NAB is selling 25% of Clydesdale through an initial public offering and will float the rest to shareholders. The flotation means NAB has divested all its UK assets. The firm now plans to focus on its core markets of Australia and New Zealand. - BBC Business News 4th February 2016

Millions of bank customers face increase in fees  - Millions of current account customers are being advised to consider their options, following an increase in fees, and changes in interest rates. From Monday, monthly charges on the Santander 123 account - held by 3.6m people - will more than double. At the same time HSBC is cutting interest payments to customers on both current accounts, and Individual Savings Accounts (ISA's). Six of the UK's biggest lenders cut rates last month, and Santander will reduce ISA rates in February. Barclays also announced more cash rewards for those who switch. The change in Santander fees - announced in September - will see customers paying £60 a year, instead of the previous fee of £24. Santander said it was raising fees because of the increased cost of running a bank, such as capital requirements and the government's bank levy. It was raising the cost of owning a credit card because of new European limits on interchange fees - the amount that banks can charge retailers for processing payments. - BBC News 11th January 2016

IBAS said: “ When faced with lower profits, greater competition or higher regulatory cost - banks do what they have always done – they increase margins and fees through stealth. But, there is nothing new in that. What is new, is the bank customers ability to 'switch' accounts quickly - that can be the best method of telling your bank you are unhappy they are exploiting your loyalty. However, before switching, take the time to check the facts of what you are now being asked to pay or will be losing against the competitors rates and fees.”

Q&A: Switching bank accounts A survey for Santander found that 20% of those questioned would rather go to the dentist than switch their bank accounts. But in September 2013, the process of switching became a lot less painful. - BBC News 11th September 2014

MPs To Quiz FCA Heads On Ditching Banks Probe - the banking review which had been part of the FCA's 2015 business plan was shelved last month. That decision sparked concern among some MPs that the watchdog was under pressure from the Government to soften its approach to banks. The chairman of the Treasury Select Committee, said recent decisions by the FCA were giving the impression of a "weakening of resolve". He said: "The FCA's decision to drop its review of bank culture does seem curious."

The FCA was set up in 2013 after its discredited predecessor, the Financial Services Authority, failed to spot the financial crisis of 2007-9 coming or take on a string of mis-selling scandals. The Treasury last year ousted the FCA's hardline chief executive and has also eased rules making top bankers more accountable from next March. The watchdog has also said recently that it will take no action against HSBC over allegations of Swiss tax avoidance and shelved a report into incentive structures for financial product sales staff. The reputation of the banking sector has been tarnished by its role in precipitating the financial crisis and scandals such as the rigging of benchmark interest rates and the foreign exchange markets – which resulted in billions of pounds of fines.

But the FCA now says that rather than a full-scale review, engaging with banks individually is a better way of improving conduct. The committee is to assess the watchdog's efforts to meet its increased responsibilities over the last few years. He said: "Getting it right – securing better protection for consumers and markets while at the same time ensuring they don't make life unduly burdensome for business, from which everyone would ultimately be the loser – is a big undertaking. "The committee will want assurance from the FCA that it is up to the job." - Sky News 7th January 2016

The 'bogus boss' email scam costing firms millions - CEO fraud is not just a French problem. In the US, the FBI's internet crime centre or IC3 has been tracking "business email compromise" scams, as it calls them, and reckons about 7,000 companies have been defrauded of more than $740m (£508m; €682m) over the last two years. The real figure is likely to be much higher knowing how reluctant companies are to admit being defrauded in this way. But why is CEO fraud proving so effective?


Such a scam can easily bypass email spam filters and antivirus security systems because it's only an email 'conversation' and very low-tech and a big departure from the large, automated malware attacks we're used to. These fraudsters use publicly available corporate data which can be easily gleaned from the internet. They obtain information on the bosses and senior financial officers from social networks like LinkedIn and also from press releases. All of that makes the emails convincing. Staff are not likely to question instructions from a ceo and it's this psychological manipulation with a real sense of urgency that is a major factor in this fraud's success - It is because criminals can make so much money in a very small amount of time with minimal risk that UK Businesses should now be extremely vigilant - BBC Business 8th January 2015

Bank Reform: Osborne 'Lacks Motivation' - Sir Vince Cable has accused the Chancellor and Governor of the Bank of England of "lacking motivation" to crack down on abuses in the banking sector. Sir Vince - a fierce critic of the industry while in government - told the Murnaghan programme the decision showed that lobbying by the banks had clearly worked for them and that a "blind eye" was being adopted to abuses. He added: "What's happened now is that the balance has gone. The bankers are being listened to."Their complaints are taken on board and a blind eye adopted to abuses in the system."He made his comments as The Chancellor  prepares to name a new chief executive of the Financial Conduct Authority (FCA) .The FCA's decision to drop the banking culture review - in favour of working with individual banks - further suggests that a better working relationship with the banks is being sought now they have largely recovered from the financial crisis fallout.- Sky News Monday 04 January 2016

IBAS Comment: there is a good deal of criticism that the Chancellor is now risking sending a too lenient a message to the City, as a continuing volume of misconduct penalties have been announced by regulators.

The FCA must not take their eye off the ballWhich? executive director, said: “It’s disappointing that the regulator has decided against publishing this report on the culture of banking. Cultural change doesn’t happen overnight, so despite signs of improvement, the FCA must not take their eye off the ball and should continue to clean up the industry.” Which? response to the FCA scrapping their banking culture report - 31st December 2015 Which?

One in three in the dark over mortgage interest rate - New research reveals that one in three mortgage holders have no idea what rate of interest they are paying, despite market speculation that an interest rate rise is on the horizon which could increase their repayments. Which? Mortgage Advisers has found one in three (32%) mortgage holders were unaware of the rate of interest on their mortgage with just three in ten people (29%) sure of their exact rate. - Which? Research 4th December 2015

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 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, Telegraph and Daily Mirror


- see Business: Your Money Not a moving account  - BBC 22/07/99


Last modified: 18th March 2019