MPs question RBS change of culture

MPs question RBS change of culture

A Royal Bank Of Scotland (RBS) claim that it has changed its culture has been questioned by a group of top MPs as employees involved in what has become known as the GRG scandal are still working for the bank.

⚠️ With the PPI Deadline less than a year away, now would be the perfect time to check!

The Treasury Select Committee are calling for the law to be changed after Britain’s financial regulator said it was powerless to take action against the bank because investment banking in the UK is largely unregulated.

Investigation

The Financial Conduct Authority (FCA) conducted a full scale investigation of the Global Restructuring Group (GRG) division of RBS after an independent review it commissioned found that GRG ‘fell well short’ in its treatment of the small business customers it was supposed to he helping back to financial health.

FCA chief executive Andrew Bailey admitted: “It is important to recognise that the business of GRG was largely unregulated and the FCA’s powers to take action in such circumstances, even where the mistreatment of customers has been identified and accepted, are very limited. Taking action was therefore always going to be difficult and challenging.

Frustrated

“I appreciate that many GRG customers will be frustrated by this decision, but we have explored all the options available to us before arriving at this conclusion.

“The fact that we can’t take action in no way condones the behaviour of RBS. We expect high standards from the firms we regulate and RBS fell well short in its treatment of GRG customers.

“We feel strongly that those companies that have suffered loss as a result of how they were treated whilst in GRG must be appropriately compensated.”

Mistreatment

The FCA report stated nine out of 10 companies handled by GRG had been subjected to some form of mistreatment, with one in six experiencing ‘material financial distress’.

The independent report produced for them said the actions of the department were ‘part of an intentional and co-ordinated strategy to focus on GRG’s commercial objective and to place inadequate weight on the interests of its SME customers (small to medium enterprises)’.

Victims

Treasury Committee chairwoman Nikki Morgan said: “Victims would find the regulator’s decision disappointing and bewildering.

“This demonstrates the need for a change in how lending for SMEs is regulated. The government should stand ready to introduce any legislation required.”

Recklessly destroyed livelihoods

The committee produced a 64 page report on small business finance which said GRG had recklessly destroyed livelihoods in pursuit of profit.

It also attacked RBS’s decision to retain the staff which worked in the department, saying it threatened to ‘seriously undermine RBS’s claim that the bank’s culture has changed fundamentally in recent years’, adding that it ‘raises concerns that the bank has merely undertaken a rebranding exercise’.

Regulatory black hole

Ms Morgan said small businesses had found themselves in a ‘regulatory black hole’ and her committee recommended the creation of a special tribunal to handle disputes between businesses and their financial providers.
She said: “The Treasury should bring commercial lending inside the regulatory perimeter, allowing the introduction of a regulatory regime that adequately protects SMEs.”

Untouchable

Co-chairman of the all-party parliamentary group on fair business banking, Kevin Hollinrake, said that RBS and its bosses were ‘untouchable and protected by the regulatory inadequacy of our current system’.

Repeat

Mike Cherry, national chairman of the Federation of Small Businesses, claimed there could be a repeat of the GRG episode unless the regulations regarding business lending are changed.

He said: “As long as commercial lending remains unregulated, small firms will be vulnerable.”

PPI NEWS UPDATE – APRIL 2019

PPI NEWS UPDATE – APRIL 2019

More than 3.3 million new PPI complaints made in 2018

New figures released by the Financial Conduct Authority (FCA) show that, more than a decade after the first warnings were sounded about the PPI scandal, more than 3.3 million consumers made a new complaint in 2018.

More than 3.3 million new PPI complaints made in 2018

New figures released by the Financial Conduct Authority (FCA) show that, more than a decade after the first warnings were sounded about the PPI scandal, more than 3.3 million consumers made a new complaint in 2018.

TSB to refund online fraud victims

TSB has become the first British bank to commit to refunding any of its 5.2 million customers who fall victim to online fraud.

News by month:

News by Category:


Menu