A STALWART of a Westminster group on fair banking has called for a public inquiry into a disgraced unit of Royal Bank of Scotland (RBS) and said the issue of its Global Restructuring Group (GRG) will not finally be settled until there is one.

Michelle Thomson, a former SNP MP who still works with the All-Party Parliamentary Group (APPG) on Fair Business Banking, was speaking after a court was told that the Government’s influence over the controversial business turnaround unit in the years following the financial crisis was “pervasive”.

The GRG has faced multiple allegations that it drove small businesses into the ground in what has been described as a “dash for cash”, as RBS tried to improve its balance sheet following a Government bailout of more than £45 billion.

Oliver Morley, a Manchester-based businessman, has accused RBS of putting his business under “economic duress” when it acquired some of its assets in 2010.

The bank is contesting the case, claiming that it is without merit. Court documents quoted an internal memo that said the GRG was influenced by the Asset Protection Agency (APA), a Treasury branch which ran the Asset Protection Scheme (APS), a body that insured the bank’s toxic loans during the financial crisis.

One extract from the memo said: “Overall the direct and indirect impact of the APS is pervasive across the group and cannot be underestimated.

“The burden of APS needs to be reviewed in light of the expected diminishing benefit of the scheme.”

Letters from Stephan Wilcke, former APA chief executive, were also quoted, in which he discussed how to “motivate RBS to review and trigger assets on time” and how “senior RBS personnel would be remunerated”.

Thomson, a founding director of the Momentous Change consultancy, told The National: “As a continuing ambassador of the Westminster All Party Parliamentary Group for Fair Business Banking, I am dismayed to see the continued attempts to keep what really happened with the scandal of RBS GRG, the role of the Treasury of the UK Government, and the FCA out of the public domain.

“This is an issue that will not go away until there is a full public inquiry.

“We can never forget that this affected not just small business owners and their employees but the very fabric of the essential trust between our financial system and society.”

A report by financial watchdog the FCA last month acknowledged the influence of the APS on bankers within the GRG.

A Treasury spokesperson said: “We can’t comment on ongoing court cases.

“The Asset Protection Scheme was set up after the financial crash to help safeguard the bank’s stability and in turn that of the wider UK economy.

“The recent FCA-commissioned investigation concluded that RBS’s participation in the APS made no difference to the way in which customers were treated.”