If your misconduct is responsible for bringing the global economy to its knees, then just saying “sorry” is not really good enough. A decade after the financial crash, the UK lacks a robust regulatory system that can protect SMEs (small-and-medium-sized enterprises) from rogue bankers. This is not a contentious assertion. MPs, regulators and business groups all agree that SMEs with legitimate grievances against the banks do not have a fast, inexpensive route to justice.
At the same time, there is growing unease about the fact that nobody has been jailed for banking misconduct that wrecked firms and pushed some victims to the brink of suicide.
Regulators have admitted that they are still having to deal with the fallout from the failure to prosecute senior bankers after the financial crash.
Charles Randell, the newly appointed chairman of the Financial Conduct Authority, told The Times: “The fact that bankers didn’t go to jail will be a scar that financial regulators continue to carry for a very long time.”
The regulatory system is facing a crisis of confidence, which can only be rectified by revolutionary change. That’s why the UK needs a new tribunal to ensure SMEs who have been bullied by the banks gain the protection they deserve. Plans for a new tribunal have gained support from the All Party Parliamentary Group on Fair Business Banking, (APPG) leading lawyers, a number of banks, the regulator and the victims themselves.
So when UK Finance, the banking industry’s trade body, commissioned an independent review into the way SME complaints are resolved, there must have been hopes that the findings would help bring closure to a troubled period.
The APPG and misconduct victims have been bitterly disappointed by the review’s findings. It concluded that the proposed tribunal would be expensive and could take years to set up. It argued that a new division of the Financial Ombudsman Service (or FOS - we’re deep in acronym country), could focus on disputes between banks and SMEs.
Simon Walker, the review’s chairman, told MPs that the tribunal would be costly, because it involves lawyers, and would take years to legislate because Parliament would be busy with Brexit.
Some MPs were unimpressed. Rushanara Ali, a member of the Treasury Select Committee, said the review “feels quite timid” while other committee members expressed doubts that the FOS could make the changes needed to provide justice for SMEs without a “hurricane” behind it.
The MPs are right to be sceptical. The last thing the FOS needs is a mountain of cases thudding on its desk.
It is already the biggest ombudsman of its kind in the world. Another terrible example of banking misconduct - the mis-selling of payment protection insurance - has placed tremendous strain on the FOS’s resources.
Mr Walker argues that, instead of cutting staff as the deadline for PPI complaints passes, the FOS could retain the staff for the new business complaints unit.
But surely there is a significant difference between the processes needed to handle high volume PPI cases, and complex allegations of misconduct and bullying?
To tackle misconduct involving SMEs, you need to use a scalpel. The FOS might have a role in dealing with some complaints, but you need a tribunal, supported by a formidable legal team, to ensure that the vast majority of SMEs gain access to justice.
As Kevin Hollinrake MP, the co-chairman of the APPG states, the FOS is not equipped to handle disputes between well-resourced banks and the owners of SMEs who may be at the end of their tether; emotionally and financially.
It would be a terrible indictment of the political class if our obsession with Brexit prevented small firms from holding the big banks to account. Our timid regulatory system is in the doghouse.
The Government can restore its credibility by displaying a flash of steel and establishing a tribunal that places the victims first.