Fury at failure to act on RBS
ROYAL BANK OF SCOTLAND has escaped disciplinary action over its mistreatment of struggling small businesses after the City watchdog admitted it was powerless to intervene.
A scathing independent review of the bank’s Global Restructuring Group had found a “failure to recognise and manage conflicts of interest inherent in its commercial and turnaround objectives”.
Firms had looked to the GRG for help after the financial crisis but the unit was accused of worsening their plight to pick up assets on the cheap.
The review found no evidence that RBS artificially distressed and transferred to GRG otherwise-viable businesses in order to profit from their insolvency.
The Financial Conduct Authority launched a “comprehensive and forensic” investigation after the “serious concerns” raised in the review to see if any action could be taken against RBS or its management.
But FCA chief Andrew Bailey, pictured, said its powers were “very limited” because the business of GRG was largely unregulated.
He said: “Taking action was always going to be difficult and challenging but after carefully considering all the evidence we have concluded that our powers to discipline for misconduct do not apply and that an action in relation to senior management… would not have reasonable prospects of success.
“I appreciate many GRG customers will be frustrated. This in no way condones the behaviour of RBS.”
Nikki Turner, of support group SME Alliance, said members were “shocked and disappointed”, at its “bizarre and cynical conclusions” adding: “We were not expecting this whitewash.”
Federation of Small Businesses chairman Mike Cherry said: “There’s nothing in the legislative framework to stop another GRG-type scenario. As long as commercial lending remains unregulated, small firms will be vulnerable.”
RBS chairman Sir Howard Davies said: “The way the bank deals with business customers in difficulty is fundamentally different now.”
Treasury committee chairwoman Nicky Morgan MP said: “This demonstrates the need for a change in how lending for SMEs is regulated. The Government should stand ready to introduce any legislation required and consider what powers the FCA requires.”