A group of influential MPs has branded a report into the controversial GRG division of the Royal Bank Of Scotland (RBS) ‘another complete whitewash’.
The All Party Parliamentary Group on Fair Business Banking slammed the 78 page report and the Financial Conduct Authority (FCA) for the way in which the controversial Global Restructuring Group (GRG) was investigated.
They said the financial regulator had failed to find out whether the bank’s management had been aware of the activities of the group which has been accused of shutting down healthy firms.
Co-chair of the committee Kevin Hollinrake said: “This report is another complete whitewash and another demonstrable failure of the regulator to perform its role.”
He pointed out that the FCA was supposed to investigate the root causes of the RBS problems and whether they had been known about or authorised by the bank’s management, but added: “They have manifestly failed to do this.”
A probe into the activities of GRG was initiated after claims that between 2008 and 2013 it had undermined some of the firms it was supposed to help and then stripped them of their assets as they went out of business.
A ‘secret’ report in February of last year said the department mistreated thousands of firms by taking ‘inappropriate’ action, accepting there were ‘widespread and systemic’ problems.
The full report was published by the Treasury Select Committee after RBS had refused to do so for what it claimed were legal reasons.
The report had found that one in six firms may have been damaged by GRG with interest charges being raised and being hit by new fees. It said: “Our central conclusions are that there was widespread inappropriate treatment of customers by GRG.”
It further stated there were ‘fundamental failings’ in the management of the unit and GRG put its own interests ahead of the firms it was supposed to be helping.
In an interim report published in July last year the FCA said its powers were ‘very limited’ because the work of the unit had been unregulated. It also argued there was ‘no reasonable prospect of success’ when it came to taking action against senior managers after it had found no evidence of dishonesty by senior individuals.
In its latest report the regulator said it found ‘no evidence that any member of senior management was dishonest or lacking in integrity’.
FCA chief executive, Andrew Bailey, said in a statement: “Our investigation has found that GRG clearly fell short of the high standards its clients expected but it was largely unregulated and so our powers to take action in such circumstances, even where the mistreatment of customers has been identified and accepted, are very limited.
“GRG has been highly damaging for those customers impacted and more widely for the reputation of the banking industry. Combined with other issues that have impacted SME’s, it is important for all who work in this sector to regain the public’s trust.”
Difficult to reconcile
But Mr Hollinrake said it was ‘difficult to reconcile’ the FCA’s findings with what had happened and called on the regulator to publish ‘a full account of its findings, including naming those responsible for the shameful mistreatment of thousands of UK small businesses’.
RBS chairman Howard Davies commented: “We welcome the conclusion of this investigation and the confirmation that no further action will be taken.
“The way the bank deals with business customers in financial difficulty today is fundamentally different to the aftermath of the financial crisis, during what was a hugely challenging time for the bank, its customers and the wider economy. We are committed to ensuring that past mistakes cannot be repeated.”