Vince Cable has received a stark report from his business adviser documenting businesses that have suffered from abusive banking support from government-backed banks but felt too afraid to speak out.
"I can really empathise with businesses not wanting to speak out, they've not only got to think of their business but the impact any backlash will have on their staff, their suppliers and even their home and family. They feel isolated and don't know who to trust,” Tomlinson told the Huffington Post UK.
One banker who used to work for a government-backed bank admitted in the report: “I’ve seen the whole thing in terms of the Bank crucifying good quality customers. Some businesses, good businesses, have been with the bank for 40 years and as soon as they have a tough time, the bank has not helped. In fact they have often hindered their circumstances, extracting as much as possible out of the business for their balance sheets.
A BIS spokesperson said: "The Secretary of State has seen the case studies Lawrence Tomlinson has compiled and finds them worrying, particularly the apparent reluctance amongst businesses to speak out.
"A number of these cases involve RBS, and the Secretary of State has asked that they will be considered under the independent review of lending practices that the bank has recently announced."
The evidence gathered by the LNT Group chairman suggests that nine in 10 loan applications accepted are extremely misleading, as many businesses don’t even get the chance to make an application. Other firms were charged such high fees in ‘business support’ that they fell into financial distress.
Lloyds and RBS are 39% and 81% state-owned respectively after they were hit by the financial crisis in 2008 and required state support.
Tomlinson's report included evidence from ex-bankers and businesses who indicated the problems in the government-backed banks’ practices were on an institutional level.
One banker explained their reasons for leaving the government-backed bank: “I just wasn’t prepared to apply the cruel, inhumane, non-commercial policies and decisions.”
Another said: “I was fed up of being a well-paid post box for the businesses to apply and for the bank to deliver their response. The centre frequently overrode the decisions which were made by relationship managers… The idea was to lend as little as you have to in order to remain ahead of your competitors but make sure you got as much out of it as possible.”
Commenting on his report, Tomlinson said: “I knew there was a lot of animosity towards the banks but the response I received was overwhelming. There is a complete lack of trust towards the banks, and in many cases, this is for a justifiable reason. This is coupled by an astonishing fear of the banks, no-one dares tell it as it is! It only takes the silence a few good men for bad behaviour to triumph. How can we increase lending when there is this level of distrust and the message remains ‘business as usual’ in the banks? It is time for growth not greed.
“I know there will be similar instances out there that have not yet been uncovered and I encourage affected businesses to come forward. In particular, there is an on-going Independent Review of RBS’ lending practices which I strongly urge businesses to submit evidence to.”Suggest a correction