Now City regulator plans shake-up to help entrepreneurs
Boost for MoS fight as RBS comes under attack Sir Vince Cable blasts boss over GRG fiasco
THE City’s top regulator is preparing to lay out new plans to help small firms tackle grievances with their banks.
The move by the Financial Conduct Authority marks a major milestone in The Mail on Sunday’s fight for an overhaul of the system, which leaves many companies high and dry if they are at loggerheads with a lender.
The FCA is proposing to extend the remit of the Financial Ombudsman Service to include more small businesses and will issue a consultation paper later this month.
The shake-up would give many entrepreneurs a new route to challenge banks, allowing them to avoid costly and lengthy legal battles.
The proposals are being drawn up at a time when FCA boss Andrew Bailey is frustrated by Royal Bank of Scotland’s handling of firms’ complaints about its controversial GRG operation.
Liberal Democrat leader and former Business Secretary Vince Cable has now weighed in, blasting RBS boss Ross McEwan in letters to both RBS chairman Howard Davies and Nicky Morgan, chairwoman of the Treasury Select Committee.
GRG – or Global Restructuring Group – was the division of RBS that was meant to assist troubled businesses, but which has been accused of maltreating its own customers. Bailey last week told the Treasury Select Committee that McEwan needs to ‘get his act together’ on the speed of handling gripes. The Select Committee is preparing to summon McEwan for a grilling.
Under current Financial Ombudsman rules, only individuals and micro-enterprises – firms with fewer than ten staff and less than €2million of annual turnover – can use the Financial Ombudsman.
The Mail on Sunday has been calling for a new tribunal-style system, or beefed up ombudsman, to help aggrieved small businesses.
Bailey would prefer to set up a new body to sort out disputes.
But this would need new legislation at a time when the Government is mired in Brexit. So the regulator believes extending the ombudsman is a positive first step.
McEwan was not at RBS during the GRG scandal. But Bailey has told the Select Committee he had blasted the bank for the slow rate it has handled firms’ complaints. The FCA chief also said it was ‘unfortunate’ that RBS has not accepted criticism over GRG more readily.
An interim report into GRG, published last month, cleared RBS of deliberately collapsing firms but found widespread failings.
McEwan has disputed that the bank was guilty of ‘widespread inappropriate treatment of customers’ and claimed the report had come to ‘misleading conclusions’.
Heather Buchanan, of the allparty parliamentary group on banking, accused McEwan of ‘splitting hairs about this report rather than addressing the substance’.
She told The Mail on Sunday: ‘We are so far in the hair-splitting zone we are in danger of forgetting there is a wealth of evidence based on internal documents that show a strategy to maximise profits for the bank at the expense of businesses. Consistently they (RBS) have tried to blame the victim.’
Cable, in his letters to Davies and Morgan, has raised concerns about McEwan’s handling of the situation – in particular for accusing firms of ‘badmouthing’ the bank. He urged Morgan to grill McEwan on whether he believes that ‘RBS, which is still taxpayer-owned, is above criticisms for its failures’.
Cable also suggested that the £400 million set aside by RBS to pay to GRG victims is ‘inadequate’.
An RBS spokesman said: ‘We await the letter from Vince Cable and will respond in due course.’