The Scandal
Thousands of business owners were systematically defrauded when banks lent money without explaining the toxic risks of derivative products attached to loans – products that were in many cases fraudulently concealed. After the Global Financial Crisis, banks used these means to shore up their balance sheets at their customers’ expense. The human consequences were devastating: businesses destroyed, homes lost, health damaged and lives lost through suicide.
The APPG, working alongside whistleblower service BankConfidential, banking misconduct victims and specialist advisers, has assembled substantial evidence of misrepresentation, concealment, regulatory failure and institutional evasion.
What the Debate Showed
The breadth and depth of parliamentary concern in the 14 April Backbench debate was striking. Members from across parties made a common point: something has gone badly wrong in financial services regulation, ordinary people have paid the price, and Parliament must not look away.
The Financial Conduct Authority has repeatedly failed to act. When the scandal was explained to them in detail by experts in November 2022, they let NatWest mark their own homework. When the bank concluded it had done nothing wrong, the FCA took no meaningful action – even arguing that the fraud that occurred wasn’t criminal fraud.
Responsibility Without Accountability
The deeper scandal is the system Parliament has created and maintained: one in which people are passed from bank to regulator, regulator to ombudsman, ombudsman to court, and ministers back to the supposed independence of the regulator, until no clearly answerable decision-maker can be found. That is the institutionalisation of responsibility without accountability.
Parliament cannot honestly disclaim responsibility for this. It legislated for this world. If serious grievances remain unresolved for years while each institution points to the limits of its own remit, the failure is happening inside the system Parliament created.
Why the Case Against an Inquiry Fails
The Economic Secretary to the Treasury deserves credit for engaging with the debate and agreeing to meet the APPG. But her rejection of a full public inquiry requires scrutiny. When a minister moves from “…the Treasury does not have the power to direct the FCA…” to “the Government does not believe that a full public inquiry would be the right course,” the ground has shifted. That is no longer a statement about legal incapacity. It is a statement of political choice.
The power to establish an inquiry is not an aspiration. Parliament has already legislated for inquiries when events have caused public concern. The real question is whether the Government is willing to use the powers it has.
The Post Office Lesson
No discussion of this subject can avoid the Post Office scandal. The crucial lesson is not simply that grave injustice can occur – it is that institutions under pressure will deny, deflect and delay. They will produce processes, reviews and technical explanations. Decent people, including parliamentarians and ministers, will want to believe those reassurances. But where there is persistent smoke, Parliament must suspect fire.
History is not kind to those who, when presented with credible evidence of institutional failure and human suffering, chose to trust the institution over the victims. Ed Davey knows this now. But does the City Minister?
The Path Forward
The forthcoming meeting with City Minister Lucy Rigby offers an opportunity to place evidence directly before Government. It should be approached in good faith – but good faith is not enough. What matters is whether the Government will accept the constitutional implications of what Parliament has now heard and is on the record, act correctly, in keeping with the Seven Principles of Public Life.
The ultimate measure of this Parliament will not be the eloquence of the debate. It will be whether thousands of devastated business owners and families finally receive an independent, rigorous and public accounting of what happened and who is responsible. To those who argue that an inquiry risks damaging confidence in the financial sector: it is not honest scrutiny that destroys confidence – it is proven misconduct that goes uninvestigated and unpunished.
Parliament has the power to do better. The question is whether it has the will.
