Banking StandardsWritten evidence from Michael Cassidy
This submission relates to the practices of the banking insolvency departments and how the banks deal with small business customers and is a response to the call for evidence by the Parliamentary Commission on Banking Standards.
I submit that the banks are dishonest and that their activities are detrimental to the wider economy as well as their customers. I submit that the legal immunities that the banks have in law is a large part of the reason for this. The banks are also allowed to break the law.
I have enclosed a history of my own experiences with Lloyds Bank as an explanation. The issues raised are restricted, as best as they can be, to those likely to be of relevance to the work of the Commission.
A summary of the general points are:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(k)
(l)
(m)
Recommenations for Action
1. The law should be changed so as disallow the banks demanding instant repayment of overdrafts, which is clearly impractical.
2. The courts dealing with receiverships should no longer be presided over by judges alone. Two small business representatives should sit alongside the judge. A levy can be placed on the banks to pay for this.
3. The owners of a business should be able to ask the courts to investigate a receivership for any reason.
4. The law should be changed to impose a duty of care on the banks to their customers, and to ensure that banks are obliged to mitigate their losses. Banks should be liable for negligence just as is the rest of society.
5. Banks should no longer be able to charge interest or other costs on borrowings once they have foreclosed on a customer. The outstanding debt should be frozen as at the date of foreclosure.
6. Neither the banks nor their customers [nor receivers] should be allowed to claim legal costs for a court hearing. If a party chooses to employ lawyers then they would be of course free to do so, but it will be at their own expense. Presently a businessman cannot claim legal aid relating to a business matter and, especially in a foreclosure situation, he is at a complete disadvantage. A bank should be able to explain to a court the financial position without the aid of barristers and solicitors. This will be made easier if business people are sitting alongside the judge as they will be able to draw upon their own business experience and knowledge.
7. When banks or receivers have behaved in a criminal manner, they should be prosecuted with the full force of the law. The police should no longer be allowed to turn a blind eye to criminality.
8. Judges who aid and abet criminality by the banks should be struck off—if not prosecuted.
9. The banks and receivers should not be allowed to sell customer assets either to themselves or their agents and subcontractors. This should be a criminal offence. The owner of an asset should be allowed an opportunity to match a bid from another source.
10. Reports produced by receivers should be disclosed to the owners of a business as a matter of routine. They should not be able to continue operating in secret. Banks should likewise disclose full details of their expected recovery of a debt and the expected amount that will need to be written off.
5 October 2012