“Worst allegations” against RBS dismissed as GRG report is branded a “whitewash”
Royal Bank of Scotland chief executive Ross McEwan has welcomed the Financial Conduct Authority’s decision to dismiss the “most serious allegations” levelled against the bank’s controversial Global Restructuring Group (GRG) in a move that campaigners have immediately branded a “whitewash”.
Despite accusations of a cover-up, the findings of the City watchdog’s report noted that “widespread” mistreatment of customers in some areas was identified, with 92 per cent of viable firms handled by GRG suffering “inappropriate action”, such as interest charges being raised or unnecessary fees added.
GRG operated from 2005 to 2013 and at its peak handled 16,000 companies.
Mr McEwan said the bank has set aside £400m for compensation and already paid out £115m relating to more than 900 complaints going back a decade.
But the FCA said the bank could still yet face further sanctions after its investigation found:
- GRG “placed little emphasis on the turnaround” of small and medium-sized companies, with staff not trained sufficiently in restructuring;
- A profit-driven culture came “at the expense of” the successful return of customers to financial health;
- Hundreds of viable companies in GRG experienced “material financial distress” because of being in the unit;
- GRG staff were often “insensitive, dismissive and unduly aggressive” towards business customers.
The report described how the bank’s decisions “clearly had the potential to exacerbate the already difficult circumstances in which SME customers found themselves” and had the “potential to have a significant bearing on lives and livelihoods”.
But the watchdog emphasised that the “most serious allegations” that the bank engineered the failure of small businesses and tried to acquire their assets at reduced value, were “not upheld”.
This was condemned by James Hayward CEO of RGL Management Limited, the group formed for the purpose of suing Edinburgh-based RBS over the scandal.
Mr Hayward said: “We have always said that the FCA report will be a whitewash and that now looks to be the case. From what we understand, the FCA has failed to acknowledge the serious and deliberate harm caused to businesses through RBS’ Global Restructuring Group. The FCA is making excuses in its interim report as to why it cannot bring the bank to justice, which does nothing to help redress the devastation inflicted on business owners by RBS. If the FCA cannot, or will not, take action against the bank then it is important for distressed businesses and individuals to seek justice in the courts. RGL Management is the only group ready to do so, with expertise, funding and lawyers in place.”
Also responding to the the report’s findings, RBS chief executive Ross McEwan said: “We have acknowledged for some time that mistakes were made and have apologised that we did not always provide the level of service and understanding we should have done.”
Mr McEwan added that the “culture, structure and way RBS operates today have all changed fundamentally”.
But Mr Hayward remained defiant:“If the FCA cannot, or will not, take action against the bank then it is important for distressed businesses and individuals to seek justice in the courts. RGL Management is the only group ready to do so, with expertise, funding and lawyers in place.”
Attempting to head-off allegations of a whitewash, FCA chief executive Andrew Bailey stressed that RBS did “not agree with many of the conclusions reached by the review”.
Mr Bailey is due to appear before the Treasury select committee on 31 October.
Nicky Morgan, who chairs the committee and who has led a long-running political campaign to have the findings of the FCA’s report into the scandal published, said: “It has taken the FCA too long to publish its summary of the skilled persons’ report, so this is not before time.”