MPs: RBS’s treatment of small firms ‘disgraceful’
AN INFLUENTIAL group of MPs has branded the findings of a report into the Royal Bank of Scotland’s mistreatment of small businesses “disgraceful” after wielding parliamentary privilege to publish the controversial dossier.
The previously withheld document describes “widespread inappropriate treatment of customers” by the bank’s Global Restructuring Group (GRG).
The mistreatment of customers by GRG led to “material financial distress”, said the 350-page report, published by the Treasury Select Committee under parliamentary privilege.
Committee chairwoman Nicky Morgan said: “The findings in the report are disgraceful.
“The overarching priority at all levels of GRG was not the health and strength of customers, but the generation of income for RBS, through made-up fees, high interest rates, and the acquisition of equity and property.”
The committee said there was “overwhelming public interest” in shifting the Global Restructuring Group (GRG) report into the public domain after it was widely leaked online and through social media.
The move came after Andrew Bailey, head of the Financial Conduct Authority (FCA), was ordered by the committee earlier this month to publish the document.
However, he said the release “proved impossible” for legal reasons.
RBS has been dogged by allegations that GRG intentionally pushed small businesses towards failure in the hope of picking up their assets on the cheap.
The report by Promontory Financial Group found that there was inappropriate treatment of customers. However, it said there was no evidence that “defaults were engineered to transfer businesses to GRG simply to generate revenue for RBS through fees”.
It said the failings were not “one-off errors of staff ” at an institution “under significant pressure”, but were sparked by GRG governance standards falling short. The release follows the publication of memos showing GRG staff being encouraged to
apply pressure. One memo, entitled Just Hit Budget! – from 2009 – talks of applying particularly high interest rates, which could then be reduced if customers signed over a stake in their business or property, and detailed how staff sometimes “need to let customers hang themselves”.
A spokesman for RBS said the report made for “very difficult reading” and it was “deeply sorry” that customers did not get the experience they should have done.
He added: “Although the most serious allegation, that we deliberately targeted otherwise viable businesses in order to distress and asset-strip them for the bank’s profit, has been shown to be without foundation, we know that the bank got a lot wrong in how it treated some customers in GRG during the financial crisis.”
The report was released as Jeremy Corbyn launched a new onslaught on the City of London, promising a Labour government would take decisive steps to make it the “servant of industry”, not the “masters of us all”.
Mr Corbyn said: “For 40 years, deregulated finance has progressively become more powerful. Its dominance over industry, obvious and destructive; its control of politics, pernicious and undemocratic. The power of finance created a generation of politicians who thought the City of London could power the whole economy.”