On Tuesday 24th May, I was invited to share a platform at an event at Westminster with Nikki Turner, director and co-founder of SME Alliance. The event was hosted by the APPG on Fair Business Banking and the topic under discussion was whether a financial tribunal system could kick-start cultural change in banking. I wrote about the evening in a recent blog which you can read about here.
Nikki Turner has kindly given me permission to re-produce the text of her speech, which focussed very much on the human cost of bank misconduct, and with grateful thanks her speech is set out below.
""Good evening - I'm Nikki Turner - I'm a director and co-founder of SME Alliance, We are a membership organisation which on the one hand is lobbying to give SMEs a louder voice and in particular a voice that persuades the authorities to recognise how some financial firms are systemically abusing SMEs. On the other hand and just as importantly, we are a support group for SMEs who find themselves in that position.
I would like to make the point – SME Alliance does not say all banks or all bankers are bad or that all SMEs are great business people who never fail. But it's no secret some banks have behaved monstrously to SME customers and, for the most part, they don't have access to justice.
I co-founded SME Alliance seven years after my company became a victim of economic crime and I'm now into my 9th year of investigating bank fraud. Some would say my husband Paul and I are lucky because our investigation resulted in ten people being charged with criminal offences and they are due (finally) to stand trial in September this year.
In that case, maybe bankers will go to jail but in the majority of cases we know about or read about in the press – no one is even arrested. Instead we see banks being repeatedly fined for misconduct and sometimes criminal conduct – but that doesn't help SMEs who fall foul of bank misconduct or crime, to get redress.
If I had to sum up in two words how it feels to be a victim of white collar crime, I would say “total impotency.” That's how you feel when you lose all control of your business, your future and therefore your life. You are totally impotent and there is no magic pill to cure this problem.
I'm not going to go into the many and varied ways some banks deliberately destabilise SMEs – instead I want to talk about what happens afterwards. Imagine if you can, waking up tomorrow morning to find your bank accounts are closed, your income stream is nil, your business is being sold for peanuts by a bank appointed administrator and the bank are threatening to evict you from your family home – you're living in a nightmare and your family, your staff, your shareholders and your creditors are all looking to you, to sort this out. And as things presently stand – you can't.
If you caused this scenario by gambling, by a jet-setting life style or a crystal meth habit or because you were genuinely bad at business, fair enough. But what if this was engineered by a bank who, as a matter of policy or even individual misconduct, just decided your assets would be transferred to their balance sheets? I know how devastating it is when your business is a victim of bad bank policy and I would say it's what happens next that's really dreadful. You keep fighting to get your business and your life back and you think there are set fail-safe scenarios in place to protect you. There aren't.
You start with the bank's internal complaints procedures. In my experience and especially where you allege potential crimes, you'd be better off putting your complaint letter in a bottle and launching it into the sea. Chances are the person receiving it a few years later when it washes up on a beach in Brazil, would be much more helpful and constructive than the bank - even if they don't speak English.
You go to the regulators – but the FCA will tell you they don't deal with individual cases while the FOS, the Financial Ombudsman, will explain they have a limited remit on compensation so they can't help most SMEs. Unfortunately and I do not say this lightly, many SMEs have found the regulators to be part of the problem as opposed to part of the solution. And this is almost certainly because, on the one hand, the FCA has a remit of 'consumer protection' but, on the other hand, it has a remit of 'market confidence.' In a world full of economic uncertainty and especially since the events of 2008, it seems 'market confidence' now overrides all other considerations and to me it seems illogical and dangerous to pretend any regulator can fulfil two such conflicting remits.
Other options? You go to your MP who, if they are incensed enough, might even table a debate in Westminster. Ours did and the Bank just stuck two fingers up. One for us and one for our MP.
You write to the senior management of the Bank only to get a reply from their lawyers saying “we do not intend to correspond further.” I have a file full of these letters and if the only communication is to close down communication, you can't win.
Where you believe dishonesty is involved - you go to the police but they have limited budgets since the credit crunch and, what's more, they don't like the F word. Fraud costs a fortune to investigate and if they're lucky, they may put one or two white collar criminals behind bars for the same price as putting several hundred drug dealers, burglars or brawlers in jail.
By now you're probably also struggling to keep your house as well because you've signed personal guarantees and also because you can no longer afford to pay your mortgage. In our case, HBOS / Lloyds tried to evict us 22 times. We live in a bungalow in rural Cambridgeshire but given the money and effort the Bank spent on the process, you might think we lived in Buckingham Palace!
A while ago I asked a member of SME Alliance who is fighting to get millions of pounds of his assets back, how he would describe the situation. He said and I quote “you end up feeling like a beaten dog. And you spend most of your time wondering when the next beating will happen. What they put you through alters your mind set. And that's what they want. You're so traumatised you can't even fight back.” He's right. Banks wage not only economic war on SMEs but also a psychological war.
I believe that while there is little or no protection for SMEs, banks will continue to behave in an unethical, cavalier and sometimes criminal manner to our sector for the simple and obvious reason - they know the only place our allegations can cause them major problems is in a Court room, with proper representation and a level playing field. But without doubt, there is no level playing field and in too many cases the banks have already ensured their opponents can't even afford to open the Court door let alone walk through it. SMEs have been priced out of the justice system.
We can't afford the Court fees, we can't afford the legal fees and with all respect to all the lawyers present, even if we find funders and law firms who will work on a CFA basis, we very often risk ending up in a Jarndyce and Jarndyce situation whereby the majority of any settlement doesn't go to the plaintiff but to the legal team. And part of the reason for that is because banks with their deep, shareholder money filled pockets, take every opportunity to ramp up costs.
It's bad enough when a bank destroys your business but what's really frightening is the slow realisation everything you thought you could rely on to protect you from fraud or economic crime, either no longer exists or is out of your price range. And that is the key issue being considered this evening – how can we create a viable alternative to the present inequitable situation?
We're keen to be involved and to help in any way we can to make the idea of a Tribunal to resolve the issues of David v Goliath, a reality - because the stone in a sling model just isn't working! Thank you.""
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