THE head of the Financial Conduct Authority (FCA) has told MPs it was “unfortunate” that Royal Bank of Scotland (RBS) had disagreed with the findings of its report into the bank’s treatment of small and medium-sized businesses (SMEs) that were referred to a controversial restructuring unit.
Ross McEwan, chief executive of the state-owned bank, had written to MPs outlining “concerns” over the methodology and approach of the report into the bank’s Global Restructuring Group (GRG).
But FCA chief executive Andrew Bailey told the Treasury Select Committee (TCS) yesterday that RBS should have accepted its findings and blamed the disagreements for delaying the release of an interim report.
He said: “I think the report is strongly critical of RBS and I think it is, frankly, unfortunate that RBS have not in a sense accepted that, I think, more readily. I think they should do, because a lot of ... time and a lot of effort and a lot of work has been done on this.”
In his letter, McEwan said RBS did “clearly acknowledge” that the bank could have “done better” for business customers shifted into the now disbanded GRG.
“The bank does not agree that the evidence relied upon ... substantiates the key finding that the bank is guilty of ‘widespread inappropriate treatment of customers’,” he said.
“Taken together, these approaches result in misleading conclusions likely to be misunderstood as suggesting that the bank was guilty of serious conduct failings and that these led to poor outcomes for customers.”
RBS also disputed a suggestion that GRG was likely to have caused material financial distress in up to 11 per cent of cases referred to it.
The FCA released its long-awaited interim report – a detailed summary – into GRG last week, identifying a number of failings at RBS, but said it had not engaged in the “systematic inappropriate treatment of customers”.
It has so far refused to publish the report in full, claiming it would reveal confidential information about individuals.
RBS has been beset by allegations that it intentionally pushed businesses towards failure to pick up their assets on the cheap.
Last November, RBS said it would put aside £400 million as part of a plan to refund SMEs following claims they were mistreated by GRG.
FCA chairman John Griffith-Jones told the MPs: “I do believe we are now in the process of getting money back to the victims.”
However, Daniel Fallows, director of Seneca Banking Consultants, which is handling claims from several SMEs, said: “RBS announced in July that the first phase of their compensation process had been completed, but there has been worryingly slow progress since. Businesses destroyed by RBS are still waiting for the compensation that they are rightly due. In addition to this, we lodged information requests over nine months ago which are yet to be fulfilled by RBS.
“[TSC chair] Nicky Morgan was a voice for small businesses during the TSC session, but it should be noted that there were significant material omissions within the summary report about the management structure within GRG.”
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