The Financial Conduct Authority’s final report into the Royal Bank of Scotland’s now-defunct Global Restructuring Group (GRG) said it would take no action against the lender or senior staff despite evidence of “systemic and widespread” mistreatment of small- and medium-sized business customers between 2008 and 2013.
“The firm’s relations with its customers were often insensitive, dismissive and sometimes too aggressive...” said Andrew Bailey, the regulator’s chief executive.The FCA also found that RBS failed to manage a conflict of interest involving the bank’s property firm, West Register, which was used to buy assets from distressed companies – including companies that had been diverted into the GRG unit. The FCA withheld names of senior managers responsible for the mistreatment of thousands of SMEs.
The report by the City has been described as a whitewash by Conservative MP Kevin Hollinrake, co-chair of the all-party parliamentary group on fair business banking and finance.
The SME Alliance, a small business pressure group, said it was “deeply disappointed” that despite evidence of mistreatment, no bankers had been held to account.
“The FCA seems to have concluded none of RBS, its staff or its senior management could or should be held accountable in any way. It begs the question of why the FCA started an investigation or produced a report at all when the only real beneficiaries will have been the authors?,” said Nikki Turner, director of the SME Alliance.
With commercial lending still unregulated in the UK, business customers do not fall under the financial watchdog’s jurisdiction. That anomaly has allowed RBS and GRG’s senior managers to escape disciplinary action despite evidence of mistreatment in the FCA’s report. The FCA’s investigation, first launched in 2014, said the regulator was ultimately powerless to take action, given that business lending is outside its jurisdiction.
New rules, including the new senior managers and certification regime would now help hold misbehaving bankers to account along with the extended powers granted to the Financial Ombudsman Service, which now covers complaints from a wider range of SMEs. However, the FCA has refused to speculate whether it would have punished RBS under the new rules. “We cannot say whether we would have been able to bring successful cases against RBS senior management,” it said.