Watchdog humiliated over leaked RBS report
. . . and former bank bosses under fire over scandal at toxic turnaround unit
THE City watchdog was accused of a humiliating failure last night after its secret report into a toxic business banking unit was leaked online.
Bosses at the Financial Conduct Authority had desperately fought to keep the damning findings of a probe into Royal Bank of Scotland’s tainted Global Restructuring Group (GRG) out of public hands.
But the document has been splashed across the internet for everyone to see – leaving the regulator red-faced and former RBS bosses in the spotlight over their role in the scandal.
MPs said the leak was a hammer blow to the FCA’s credibility and suggested regulators had badly mishandled the whole investigation.
Liberal Democrat leader and former Business Secretary Sir Vince Cable said: ‘The real scandal is that the FCA has been allowed to cover this up. This whole exercise has discredited the FCA.’
GRG has long been accused of deliberately wrecking small firms – costing scores of business owners their jobs, homes and marriages.
Written for the FCA by consultant Promontory Financial Group, the report points the finger of blame squarely at top RBS staff for fostering a toxic culture. MPs on the Treasury Select Committee have ordered the watchdog to release an official version of the report by Friday or hand it over to them.
The FCA has said it is still unable to make the document public because it has not been possible to give everyone mentioned a legal right of reply. However, it has agreed to give a copy to the committee.
MPs are due to meet on Tuesday next week when they are expected to decide to publish the report in full.
Committee chairman Nicky Morgan said: ‘ A version of the report is now in the public domain. The FCA has completely lost control of the publication process.’
Although no individual is personally criticised in the report, it alleges bosses encouraged a relentless focus on profit over the welfare of customers.
High-ranking RBS staff at the time of the scandal now hold senior positions elsewhere in the City – including as the bosses of drug maker Glaxo, insurance giant RSA and lender Santander.
Laura Barlow, the head of the new turnaround unit at RBS, ran the UK arm of GRG as it drove its customers to the wall.
The 50-year-old worked alongside Derek Sach, who was in overall charge of the unit and has since advised private equity group CVC. When GRG was closed down in 2014, Barlow was appointed head of the new restructuring unit at RBS, despite years of involvement with its toxic predecessor. Treasury committee member Stewart Hosie suggested her appointment ‘undermines the claim that the culture, structure and the way RBS operates today has changed fundamentally since the days of GRG’.
Current RBS chief executive Ross McEwan recently told MPs: ‘ Laura Barlow is a fantastic leader, and of high integrity.’
Stephen Hester, 57, who was chief executive of RBS from 2008 to 2013, holds the same role at RSA where he was paid £4.3m last year. For much of Hester’s reign, his chairman was 64-year-old City grandee Sir Philip Hampton, who led the RBS board from 2009 to 2015 and is chairman of Glaxo.
Another senior figure at RBS during the worst of the alleged GRG abuses was Nathan Bostock, chief executive at Santander UK. Santander’s links with GRG do not end there, however, with former RBS executive Chris Sullivan head of corporate and commercial banking at Santander.
The 60-year-old father of seven has been accused of being ‘wilfully obtuse’ to MPs about GRG.
The leaked report alleges GRG staff failed to balance customers’ welfare with the desire to make money. Companies and individuals named above declined to comment.