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.

How to Defraud People

Barclays has set aside £800 million to pay fines for being involved in rigging foreign exchange markets. In November, HSBC, Royal Bank of Scotland, UBS JP Morgan Chase, Citibank and Bank of America have all be fined for rigging foreign exchange markets. No one has gone to prison and the ill-gotten gains for these frauds cumulatively must exceed many billions of dollars. The lesson of this is obvious. Continue reading

The Banker’s Exemption From the Criminal Law

It is better to use short words instead of long phrases. We should not call spades agricultural implements and we should not call fraud  serious misconduct. However, if you a fraudster operating in the banking system, organising large scale deceptions your chances of being prosecuted are so low that I do not think I can compute them.

There are so many examples of this, that I stand in pause to know where I should first begin, but I shall simply mention the sale by all the major UK banks of interest rate hedging products to small and medium sized businesses. Continue reading

Another Banking Fraud; no one will be punished

If I devised a scheme to sell people a completely useless product I would expect, if I were caught, to go to jail. On any understanding of the criminal law this kind of activity is a crime and should be punished. However, it seems that if you are bank or a credit card company you can sell products that are totally useless, and all you have to do, when caught, is to refund some of the money you have gained. Continue reading

Immunity from Prosecution?

If I turned up on your doorstep and told you lies to persuade you to sign a contract, and you believed the lies and signed the contract and subsequently it turned out that you could prove quite easily that I had lied to you and I had deceived you, you might think that I had committed some criminal offence. Indeed, I would have committed the offence of fraud under the Fraud Act. All the prosecution need to prove that I was dishonest, that I intended to make a gain and that I made a false or misleading misrepresentation.  I could easily be shown to have an intention of misleading you, because it must have been clear that I knew I was telling you a pack of lies when I got you to sign the contract.

For some reason which I cannot understand the Fraud Act is not being applied to energy companies. Continue reading

The “help yourself” bank

The Royal Bank of Scotland is one of the United Kingdom’s largest banks. A few years ago it became insolvent and by any normal rule of business, if the shareholders were unable or unwilling to support it, the bank should have gone into insolvent liquidation. However, irony of ironies, the government deemed the bank too large to fail and supported it with so much cash that the government (or taxpayers more accurately) now owns 81% of the bank. Continue reading

Premium Phone Line Scams

Once upon a time we knew what fraud is. A scam, a con or a bit of skulduggery were easily recognised (after the event of course) and people tended to try and punish the perpetrators. Slippery Syd, a chap about whom I wrote a book, “the Master Con Man” used to spend huge amounts of time thinking up a scam, and putting it into practice, and then after having pulled off his “coup”  he usually ran away with his ill gotten gains, whether anyone was after him or not. Continue reading