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  • Writer's pictureJason Nisse

Why losers lose

I’ve been watching Mr Bates vs the Post Office on ITV this week and, like many people, becoming increasingly angry about the appalling way one of the UK’s great institutions bullied and prosecuted hundreds of its own sub-contractors to cover up a monumental failure in its computer systems. The final scenes, this being a prime time drama, show some of the minor successes of sub-postmasters in gaining compensation and overturning convictions. But critically – and this is alluded to in the closing credits:

·       The compensation has been a fraction of the sub-postmasters’ losses – and many have yet to be paid;

·       Only a small number of the hundreds of convictions (including over 200 people who went to jail) have been overturned;

·       These successes only came after a 20 year campaign by a very determined victim and the support of an enlightened law firm (though – as this excellent analysis by The Lawyer points out – two other sets of lawyers picked up the case and then dropped it).

This case reminded me of a campaign I was involved in for many years – the fight to secure redress for the victims of the HBOS Reading scandal. For those who don’t recall, a cadre of bankers within HBOS (not part of Lloyds Banking Group), mostly but not all in the Reading office, conspired with some crooked consultants to rip off companies that HBOS said were in difficulty (though in reality many weren’t really). The net result was scores of business went bust and, because a lot of business loans are secured on the owners’ properties, a lot of people lost their homes and/or went bankrupt.

In HBOS Reading there was also a dogged campaigner – in the case a couple, Paul and Nikki Turner – who took on HBOS and then Lloyds. Like Alan Bates, they were assiduous in keeping documents (it helped that Paul has a photographic memory) and created an action group called SME Alliance (which also lobbies on other banking scandals, such as RBS Global Restructuring Group [GRG] and Clydesdale/Yorkshire Bank). The Turners’ document retention was a massive help to Thames Valley police and the Crown Prosecution Service, which brought a fraud case that led to six bankers and consultants being jailed in 2017.

Lloyds refused to admit it has any responsibility until the verdicts were handed down – and then in April 2017 its then chief executive Antonio Horta-Osorio, in a bit of classic PR spin, promised speedy and fair compensation for the victims.  

And here we see the similarities between the Post Office and Lloyds:

·       Despite setting up three compensation programmes, most HBOS victims have yet to see payments worth more than a fraction of their losses, which many just accepting the derisory amounts paid because they’re so tired of the process;

·       Lloyds has been using a cadre of expensive lawyers, including Herbert Smith Freehills which advised the Post Office. Some people have said that these lawyers’ main role is to drag out the process – though I couldn’t personally comment;

·       The CEOs have received honours from the Queen – a CBE for Paul Vennells at the Post Office, a knighthood for Horta-Osorio.

In addition Lloyds asked a former High Court judge Dame Linda Dobbs to review “whether the issues relating to HBOS Reading were investigated and appropriately reported to authorities at the time by LBG, following its acquisition of HBOS”. In April it will be the 7th anniversary of this review being commissioned. Has there been even interim findings? Of course not.

Which brings me to my overall conclusion from studying these two scandals and, indeed, others. The victim, the little guy, the loser, has little chance gaining justice against a big corporate that can afford to use the legal system to spin out any redress programme. An individual or someone running a small business, simply cannot afford to fight the system – it’s like not only challenging Manchester City with a team drawn from your local U9s, but for there to be over 50 legs of the tie before a winner is decided. There’s an old quote about investing that “the market can remain irrational longer than you can remain solvent”. Well, justice can be held up longer than you can afford to fight.

You can of course turn to “the court of public opinion”. After four years of trying, Alan Bates persuaded Computer Weekly to investigate the scandal and it wrote a number of excellent articles, followed up by some good work by certain sectors of the national media. Yet it wasn’t until the ITV drama that most media woke up to the scandal.

With HBOS Reading we were helped by having a juicy court case with fraud, sex and bankers. This was followed up by some wonderful work by media – notably The Times and Financial Times. However as Lloyds dragged the scenario out over years, there was less and less interest withing the media and even the superb James Hurley at The Times could only write the same article again so many times.

The ITV drama also highlights the hard work of James Arbuthnot MP to put pressure on the Government. With HBOS Reading we had some great political backing, and the responsible minister (in our case John Glen) vowed action. But the Business Banking Resolution Service that he persuaded the banks to set up has turned out to be a paper tiger, rejecting the vast majority of claims while generously rewarding its officials and advisors.

So what’s the solution? I’m no lawyer but I feel we need a mechanism to resolve business disputes without going through the courts. I’m wondering if the Government could set up a voluntary arbitration system – something that corporates sign up to and agree to be bound by so when you are doing business with a large company you can see if your disputes could be resolved without needing legal redress.

Without something like this the losers will continue to lose.

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