A REPORT by the City watchdog into the controversial Royal Bank of Scotland Global Restructuring Group (GRG) which destroyed hundreds of small and medium-sized businesses has been branded a “whitewash”.
The Financial Conduct Authority (FCA) yesterday published its long-awaiting final report into the GRG and, while admitting it “clearly fell short of the standards its customers expected”, action against managers was not possible as it was largely unregulated.
It said it “found no evidence that RBS artificially distressed and transferred otherwise viable SME businesses to GRG to profit from their restructuring or insolvency”, and added that regulation changes since the scandal should help ensure action is enforceable in future.
Andrew Bailey, FCA chief executive, said: “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 SMEs, it is important for all who work in this sector to regain the public’s trust.”
In the report, Bailey acknowledged the distress felt by many of the group’s customers.
“The firm’s relations with its customers were often insensitive, dismissive and sometimes too aggressive; these failings made an already stressful situation worse,” he said.
“I know that many customers of GRG therefore disagree with our decision to not take enforcement action, but I hope that this report will explain why we reached that decision.”
RBS chair Sir Howard Davies welcomed the report, and said: “The bank has acknowledged that some SME customers did not receive the treatment they should have done while in GRG during the relevant period and has apologised.”
However, Kevin Hollinrake, who co-chairs the All-Party Parliamentary Group (APPG) on Fair Business Banking, said: “This report is another complete whitewash and another demonstrable failure of the regulator to perform its role. Phase 2 of the FCA’s own Final Requirement Notice was supposed to ‘consider the root causes’ and establish whether ‘the causes of such treatment were known about, authorised by and/or sanctioned by management within RBS Group’. They have manifestly failed to do this.
“In its statement last year of 28th July 2018, the FCA concluded that its ‘powers to discipline for misconduct do not apply’. It could find ‘no evidence of dishonesty, lack of integrity’ any ‘absence of competence or capability’, anyone acting ‘recklessly or with a dodgy ethical compass’ and did not ‘make findings about misconduct’ amongst the senior management team.
“How then did the UK’s biggest ever banking scandal take place?”
Neil Mitchell, a GRG victim who now runs Banks Claims Group added: “I am delighted that the … report is out as it is nothing more than a ... cover up of RBS misconduct and … confined to the dustbin so that the legal actions against individuals can now start in earnest in UK and USA.”
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