MPs and Campaigners Seek Judge-Led Inquiry into Alleged Hidden Credit Lines in UK Banking Scandal

A group of MPs, business owners, and campaigners, including City veteran Ian Tyler, are calling for a judge-led inquiry into allegations that the most pernicious aspect of a multibillion-pound banking scandal has been obscured for more than a decade.

High street banks paid £2.2 billion in compensation payouts. Tyler, who executed in excess of £100 billion of interest rate derivatives in his banking career, said the regulator does not want to answer his questions because accurate responses would result in calls for billions of pounds in additional compensation.

Ian Tyler, a 62-year-old City veteran who served as head of Royal Bank of Scotland’s balance sheet, held senior roles at Alvarez & Marsal and Deloitte, and was group treasurer at Tesco Bank, has been trying to get the Financial Conduct Authority to answer questions concerning financial derivatives for more than a year.

Tyler is also a former group head of capital at Royal Bank of Scotland. He wrote to Nikhil Rathi, chief executive of the Financial Conduct Authority, more than a year ago to ask why the authority was making statements that the FCA should know to be the exact opposite of the rules.

At the regulator’s annual meeting last October, Tyler asked whether the exposure calculation was required by prudential regulation and not solely an internal risk measure, whether the methodologies allowed for the calculator are objective in nature, and whether the calculation was a good representation of a customer’s potential financial commitments and therefore had to be disclosed.

The Financial Conduct Authority declined to answer Tyler’s questions when The Times repeated them.

Hidden credit lines were the reason banks put thousands of companies at risk of foreclosure after the financial crisis, according to the allegations. When interest rates fell to record lows after the financial crisis, the credit lines ballooned in value.

Banks forced thousands of companies to sell off assets, put them in aggressive restructuring units, and in some cases forced them into insolvency and at risk of losing their family homes.

John McDonnell, the former shadow chancellor and chairman of the all-party parliamentary group on investment fraud and fairer financial services, led a debate on the issue in parliament this month. Ian Byrne, the Labour MP for Liverpool West Derby, said that in light of the claims, there is a compelling case for extending the Hillsborough law to the FCA.

The Times reported that the scandal involved high street banks mis-selling interest rate derivatives on an industrial scale, with devastating consequences for businesses and their owners.