First be a Bank!

The Financial Conduct Authority is the United Kingdom’s regulator of financial services. It is supposed to regulate the financial services industry and prosecute wrong doers and thus protect users of financial services.

The FCA has a reasonable record in prosecuting some financial crime, but no interest in prosecuting other financial crime. The FCA’s decision to prosecute seems to depend on the status of the alleged wrong doer.

If you are an individual suspected of financial breach of regulations you will likely feel the full force of the FCA’s investigation, whether you actually committed any crime or not. The FCA will obtain freezing orders from the court, freezing all assets while an investigation, which may take several years, proceeds. That in itself is uncomfortable; a civilised society should ensure that justice proceeds swiftly, and not subject citizens to procedures which are tantamount to punishment without trial.

If a bank is suspected of wrong doing it seems that they have immunity from prosecution, as far as the FCA is concerned. There is a lobby organisation called “Bully Banks” who are seeking to protect those small businesses that trusted their banks and bought Interest Rate Hedge Products from those banks on the advice of their banks. I have written about such products elsewhere on this blog, and I have acted on several cases for clients that have needed to claim compensation from Banks for such products. It is usual to describe such products as being mis-sold, but in fact mis-selling is simply a polite way of describing a fraudulent operation by the banks in relation to these IRHPs.

At the recent FCA Annual General meeting Bully-Banks’ Chairman asked three questions:

  1. What is the aggregate of fines paid by the banks following their deliberate and systematic breaches of regulations? The answer was zero.
  2. How many sales people guilty of multiple mis-selling of IRHPs have had their status as “approved persons” cancelled? The answer was none.
  3. How many bank personnel have been prosecuted under s. 397 of the Financial Services and Markets Act 2000? The answer was none.

So it seems that if you want to mis-sell or fraudulently sell financial products you should first be a bank.

On Being Unsurprised and Surprised

I am not surprised to learn that Citigroup, JP Morgan, Barclays, UBS and Royal Bank of Scotland formed a cartel and manipulated the foreign exchange markets cheating and defrauding people and businesses out of billions of dollars. I am not surprised to see that together these banks will face penalties for this criminal action in the order of  $6bn. I am not surprised to learn that the fixing of Forex went in for seven years from 2007 when these banks were doing deals with authorities to mitigate the effect of their behaviour in other criminal activities, such as interest rate Swaps and PPI and interst rate manipulation. I am not surprised that the Financial Conduct Authority imposed a fine of £284m million on Barclays Bank. Continue reading

Fining Yourself

Can someone please explain to me the logic of fining the Royal Bank of Scotland? The bank has been undertaking some troublesome practices again.  The Financial Conduct Authority has found that more than half of the customers that the bank advised about mortgages, debt consolidation and the affordability of prospective mortgages were given the wrong advice. Presumably the advice was wrong for the customers but not wrong for the bank, and so the FCA has fined the bank £20.7 million with a discount of 30% if the banks pays the fine promptly.  Continue reading

The Crime of Wonga

The leopard cannot change its spots and pay day lenders follow a long tradition of usurious lenders who use two kinds of tactics to manipulate people. The first tactic is to pretend to be a jolly, friendly organisation that exists more to help people than to make a profit. Modern communications helps; Continue reading