Saturday, June 06, 2015

When will our banking regulators start to stand up to the banks and begin to take them on?

This question is predicated by a column heading in The Times of June 5th entitled “...Now Lloyds faces £100 million fine for PPI complaints mishandling...”

The Financial Conduct Authority found the state-backed group had wrongly denied compensation to customers over payment protection insurance (PPI) - the wider scandal that has already cost Lloyds £12 billion.

I have repeatedly stated that the British banks behave as if they are a law unto themselves, and they keep on proving me right.

They conduct themselves in the most blatantly criminogenic manner, committing financial crimes on a wholesale basis. They conduct themselves like early 20th century Mafiosi crime gangs, and it appears that nothing can be done to bring them to heel!

Sorry, someone help me please! What is this ‘mishandling’ we are now being told about?

It relates to a period from March 2012 to May 2013 when the group assessed customer complaints relating to more than 2.3 million PPI policies and rejected 37% of those - many of them wrongly. 

Lloyds apologised to customers affected.

Staff at Lloyds largest complaints handling centre were deliberately and cynically being taught ways to ensure customers got the minimum or no compensation, including initially rejecting claims, as many people, it was believed, would not pursue the matter.

The FCA found that in March 2012, Lloyds issued guidance to complaint handlers that its overriding principle when assessing complaints should be that PPI sales processes "were compliant and robust unless told otherwise".

This resulted in some of them dismissing customers' personal accounts of what had happened to them during the PPI sale.

In addition, Lloyds did not notify complaint handlers of known failings that had been identified in its PPI sales process.

Some customers were told that their complaint had been "fully investigated" when this was not the case.

Oh right, I’ve got it now, ‘mishandling’ is just another bankers’ weasel word for the deliberate and wilful ignoring of the regulator’s stated requirements that the bank should recompense clients for the cynical and deliberate exercise of fraud and criminality they had engaged in for years.

I mean, it was not as if Lloyds didn’t have form for dragging their feet over paying back the money they had nicked from their hapless clients. Only 2 years ago, Lloyds was fined £4.3 million for delays in making compensation payments to more than 100,000 clients who had been defrauded in the so-called PPI-mis-selling scam. (Mis-selling was another piece of verbal double dealing, and meant fraud on an institutional scale)!

Clearly, that fine taught Lloyds not to do it again and get into compliance, and this is what I mean when I pose the question; ‘What can be done to get these bastards to toe the line?

Their response to their regulator was no doubt to issue a lot of verbal garbage about putting customers first, and learning lessons from the past, but in reality, they were merely sticking two fingers up at the FSA and then the FCA, and carrying on ignoring the instructions of the regulator.

The big problem is that the regulatory agencies must start to behave as if they really do mean business and stop mealy-mouthing about what they see as their regulatory responsibility.

They have a raft of penalties available to them, including one which enables them to define an individual in the industry as ‘not fit and proper’ to have the control of a regulated entity.

I believe that this finding ought to be directed at every member of the Lloyds main board, and they should start packing their bags immediately and clearing their desks. They have openly connived at PPI wrongdoing for years, and now, when the chips are down and they are required to pay for their misdeeds, they simply do everything in their power to avoid the likely consequence of their criminal actions.

The fine is the largest ever retail banking penalty imposed by the authority - other larger charges have related to trading scandals such as Libor benchmark rate-rigging and foreign exchange rate manipulation. But fines are not a proper penalty for board members who simply will not do what they are instructed to do by their regulator. They have to be taught a hard and painful lesson, and we should start by ejecting them from the financial sector for life. Fines are not paid by these mafia goombahs personally, their impact falls entirely on the shoulders of the shareholders of the bank, so other means have to be found to name, shame and punish these organised criminals.

Lloyds has been the worst-hit by the PPI mis-selling scandal, having set aside a total of £12 billion out of a running total for the whole industry of £26 billion.

Georgina Philippou, acting director of enforcement and market oversight at the FCA offers the usual regulator-speak bromides by way of public statement. She is reported to have said: "If trust in financial services is going to be restored following the widespread mis-selling of PPI, then customers need to be confident that their complaints will be treated fairly. 

"The size of the fine today reflects the fact that so many complaints were mishandled by Lloyds.

"Customers who had already been treated unfairly once by being mis-sold PPI were treated unfairly a second time and denied the redress they were owed. Lloyds' conduct was unacceptable."

Making public utterances such as these go nowhere near defining the level of egregious conduct or dishonest behaviour that Lloyds has engaged in.

Ms Philippou frankly needs to rethink her approach to her role. If she honestly believes, after all this time and evidence of concerted wrong-doing and criminal damage that has been caused to the banking public that ‘trust in financial services is going to be restored’, she is kidding herself. Trust in banking will never be restored until the mafia bosses who are running these organised crime families are brought low and gaoled, named and shamed for their wilful failure to run decent and honest institutions. 

Instead what are we faced with? More public utterances which manage to diminish the sheer scale of the wrong-doing to a level equivalent to cheating at Scrabble.

Mr Horta-Osorio (Lloyds Bank CEO) said: "We made mistakes in our handling of some PPI complaints. I am very sorry for this. We have been working hard with the FCA to ensure all customers receive appropriate redress.

"That process is now substantially complete. We remain fully committed to improving our operational procedures and ensuring we do the right thing for our customers."

Yeah, yeah, yeah, yadda, yadda, yadda! It’s just the same old, same old, all over again, until the next time. And there will be a next time, depend on it. These banking crime gangs can’t make their numbers, and their executives cannot get their obscene bonuses without committing major crimes. They are already proving that as bank after bank cuts down on what were once big revenue generators, but which are now, increasingly unprofitable business centres.

Today's fine comes days after the Government fired the starting gun on a £4 billion "Tell Sid"-style share sale to be launched within the next 12 months as it seeks to sell off more of the taxpayer stake in Lloyds.

Lloyds was rescued by the taxpayer at the height of the financial crisis, but the Treasury's holding has since been shrunk from 43% to just under 19% as parcels of it have been disposed of on the stock market.

The group has faced a series of fines in recent years. Last July it was hit with penalties totalling £218 million by the FCA and US regulators over benchmark rate-rigging practices.

These included an attempt to rip off the Bank of England over its financial life support scheme, behaviour described as "highly reprehensible" by Bank governor Mark Carney.

In December 2013, Lloyds was fined £28 million over incentive schemes that rewarded staff with "champagne bonuses" and put advisers under pressure to hit sales targets or face demotion.

Lloyds has a rap-sheet longer than that of Ronnie Kray!

They have repeatedly committed gross financial crimes of every kind, and they keep on getting fined for wrong-doing.

Not that any of this seems to impact upon Mr Horta-Osorio? I don’t want to give the impression that he has not been impacted by these fines, the chief executive’s bonus was reduced, by about £360,000, but he could still be in line for a £4m payout from bonuses awarded in 2012 and 2013 – the period when the bank was found to be treating customers unfairly – and another £6.4m from a long-term scheme.

A £10.4 million bonus, eh? That should take the sting out of any opprobrium he might receive for treating his customers unfairly!

George Osborne has gone on the record today saying the time for banker bashing is over, that the banks have reformed and are operating under new rules! 

He is wrong, the leopards have not changed their spots, and they will continue to rip off their customers at every opportunity. They can’t help it, it is engrained in their DNA. We must continue to bash these bastards at every possible opportunity!

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