Cowed RBS bosses admit failings in face of Westminster grilling as watchdog finally relents over GRG report

Top brass at the Royal Bank of Scotland have again been sent scrambling over revelations of how the Edinburgh-based lender treated small business customers in a bruising session in front of MPs that has forced the Financial Conduct Authority into a dramatic u-turn on its decision not to publish its full confidential report into the mistreatment of small businesses by the bank’s now notorious Global Restructuring Group.

Yesterday, in front of the Treasury select committee, Chairman Howard Davies admitted his embarrassment over the affair while chief executive Ross McEwan was forced to concede he had made an untrue statement when he claimed that the GRG had turned around the vast majority of businesses that entered it.

Mr McEwan made the admission after it emerged that in fact only 10 per cent of the GRG’s 12,000 clients ever returned back to mainstream banking.

It has also now become known that more than 30 per cent of the businesses went into insolvency, while others were sold or moved to other banks.

Companies that went into GRG have since accused RBS of pushing them into insolvency so that it could strip them of their assets on the cheap.

Speaking to the Treasury committee in London yesterday Mr Davies described his shame at the recent release of an internal memo showing ways in which bankers were given tips around how to squeeze more money out of vulnerable firms that were already in trouble, and that managers should “let customers hang themselves”.

Mr Howard said the memo was “the stuff of which nightmares” are made and “We can do nothing but abase ourselves as far as that’s concerned. It’s absolutely awful.”

Meanwhile, when pressed by an MP on the committee, RBS CEO Mr McEwan admitted there “may well have been cases” where staff at GRG had been insensitive or aggressive in their treatment of struggling firms despite previously disputing these findings by consultancy Promontory which was commissioned to write a report on the unit.

Mr McEwan said: “Let me be quite clear with the committee: we did not do a good job with these customers and the report shows that – we did not do a good job.

“At the time when they were in most need of help this organisation in many, many cases and far too many cases was not there giving them the help they needed.”

During the hours long grilling Mr Ross McEwan was also asked by MPS who he believed was ultimately to blame for the conduct of the GRG.

Responding, Mr McEwan seemed to attempt to distance the bank’s boardroom from the scandal, saying: “Well I think it has to be the senior executive of that operation that takes the accountability,” he said, suggesting blame would not be placed on boardroom leaders of the bank.

“We’ve actually got a number of people whose pay and longterm pay has been suspended while these reviews go on and while the FCA does their review as well,” he added, referring to those connected with the management of the GRG during the period in question.

In the wake of yesterday’s Westminster dressing down, the FCA said it will now publish in full its report into the scandal.

While campaigners from across the political spectrum have long demanded full disclosure of the watchdog’s findings, the FCA has argued it could not release the full text as it did not have the consent of the individuals interviewed, and there is also an ongoing enforcement investigation regarding individual bankers’ conduct.

However, the regulator said yesterday: “The FCA welcomes the statement by Royal Bank of Scotland, given at today’s Treasury committee hearing, that they will not object to the FCA publishing the s166 report into the treatment of small- and medium-sized enterprise customers transferred to its global restructuring group. On this basis, we are content to publish the s166 report. To do so will also require the consent of those who provided the information in the report and any individuals who are identified. We will approach these individuals, once the work on the focused investigation is completed, to ask for their consent to publish.”

A spokesman for the GRG Business Action Group, which represents more than 500 businesses bringing a class action against the bank over the conduct of the GRG, said: ““We welcome the FCA’s agreement to publish the report in full, a move we have consistently called for. It is just a pity that GRG’s victims have had to wait for so long, thanks to the pointless intransigence of RBS and the regulator.”