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.

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

Fraud Helps Stimulate the Economy

Lloyds banking group, which includes the Halifax and the bank of Scotland, has increased its provisions for its previous shameful activities. The provision for selling people payment protection insurance, which has been more akin to an old style confidence trick that it has to an activity that you would expect from a supposedly reputable bank, has been increased by £1.8 billion to almost £10 billion and the provisions for compensating businesses for selling them interest-rate hedging products has been increased by a mere £130 million. The latter seems suspiciously low figure. Continue reading

Why?

It comes as no surprise that the Royal Bank of Scotland has had to set aside the £3.1 billion in order to make provision for the claims against it in relation to what really amounts to its fraudulent behaviour towards its customers. Continue reading

Bad Banks

It is not surprising that claims are beginning to be made in the press that the banks have behaved rapaciously and immorally. The latest allegations is that RBS, a bank now mainly owned by the taxpayer, has squeezed some assets from some of its borrowers and put the borrower into liquidation in order to acquire the asset for a fraction of its real value. Continue reading

The Banking Crisis Continues

The banking crisis has not gone away, but is still with us. Banks have thinly disguised their shortcomings. They are still diseased, even though they have the appearance of modest health. Regulators, at the behest of governments, are trying to cure the patient without killing it. Whether they will succeed remains to be seen. Regulators are prescribing unpleasant medicine which will prevent banks from being as profitable as they once were, in order to try and reduce the risk of bank failure, which is catastrophic not just for the banks and their shareholders, but also for society. Continue reading

Good Riddance to Bad Rubbish

It seems an odd task for a Chancellor of the Exchequer. Mr Osborne is off to Brussels to trying to convince the European Community that its plans to restrict bankers’ bonuses to the equivalent of a year’s salary are wrong. The public have rightly identified that the economic problems which followed the bank’s bail out are largely laid at the door of bankers who used our money to gamble, and in gambling lost, as all gamblers do. The bankers were motivated to gamble by huge bonuses, so, the public perceives, anything that makes gambling with l’argent des autres is undesirable and should be restricted. Continue reading