FCA boss again defends decision to let off RBS over GRG scandal

Andrew Bailey, chief executive the Financial Conduct Authority, has restated his defence of the City watchdog’s lack of legal action taken against Royal Bank of Scotland and its top personnel over their treatment of small business, despite the behaviour already being condemned by the FCA’s own investigation into the affair.

Speaking at the FCA’s annual public meeting this week, Mr Bailey repeated that disciplining anyone at RBS over the conduct of bank’s now defunct Global Restructuring Group’s (GRG) does not fall within its remit.

The repeated comments come after news last month that the SME Alliance has launched its own investigation into the conduct of the shamed GRG with the aim of seeing executives held to account for their past misconduct.

The now notorious GRG has already been the subject of multiple probes since the companies put under its “care” accused the Edinburgh-based lender of pushing them into insolvency so that it could strip them of their assets on the cheap.

However, despite the investigations finding senior management responsible for serious misconduct, they were let off the hook after the FCA said action over lack of fitness and propriety “would not have reasonable prospects of success”.

Speaking again yesterday on the matter, Mr Bailey said: “It is important to recognise… that the business of GRG was largely unregulated and the FCA’S powers in such circumstances are therefore very limited.

He added: “After considering all the evidence we concluded that our powers to discipline for misconduct did not apply and that any action in relation to senior management would not have reasonable prospects of success.

“Because of the importance of the issue, we had this conclusion ratified by independent senior counsel.

“I recognise the frustration this decision caused to GRG customers, but I’d like to make clear that we explored all the options available to us before arriving at this conclusion.”

Mr Bailey also pledged to release further details on how the FCA’s decision was reached.

Responding to the latest comments, SME Alliance director Nikki Turner, said: “We will study the detail behind the FCA’S decision not to pursue any bankers over the scandal at RBS GRG with a fine-tooth comb. The inability of the FCA to find evidence that would lead to RBS bankers being held to account is the reason why we are conducting our own investigation

“We trust that the investigation into HBOS Reading will not deliver such a disappointing outcome.”