Businesses have branded a report into Royal Bank of Scotland’s treatment of small firms a “whitewash” and have threatened legal action against the Edinburgh-based financial giant to claim compensation.
The Financial Conduct Authority (FCA) has said it is to investigate further allegations against RBS following an independent review of its dealings with around 12,000 customers. The watchdog said it is “focusing on whether there is any basis for further action within our powers” after publishing an interim report which identified a number of shortcomings at the bank.
However, it said that the most serious allegations against RBS were not upheld. But RGL Management, a company formed for the purpose of suing RBS over the alleged actions of GRG, said the FCA’s report was “making excuses” and threatened legal action against the institution.
The investigation, which looked at the bank’s dealings with customers who were part of RBS’s now-defunct Global Restructuring Group (GRG), identified a range of problems, including “a failure to support SME businesses” and “a failure by RBS to adopt adequate procedures concerning the relationship with customers”.
RGL Management chief executive James Hayward said: “We have always said that the FCA report will be a whitewash and that now looks to be the case. The FCA is making excuses in its interim report as to why it cannot bring the bank to justice, which does nothing to help redress the devastation inflicted on business owners by RBS.
“If the FCA cannot, or will not, take action against the bank then it is important for distressed businesses and individuals to seek justice in the courts.”
Mike Cherry, national chairman of the Federation of Small Businesses, said: “What really matters now is that GRG victims receive the compensation they’re due. A decade is too long to wait for justice. We should be putting the victims first. That starts with equipping them with the information they need to achieve compensation.”
Andrew Bailey, FCA chief executive, said that the “Skilled Persons’” report identified “other concerns” about the treatment of SME customers, but that the most serious allegations against the bank had been dismissed. It was claimed that RBS forced small businesses which were facing financial trouble into the GRG unit, where it was said to have charged high lending fees and profited by buying up properties belonging to the firms at discounted prices.
Mr Bailey said: “Commercial lending activity is largely unregulated in the UK but given the seriousness of the allegations against RBS it was appropriate for us to look at their treatment of SME customers. RBS has since taken voluntary steps, such as its proactive review of complex fees, and setting up a complaints scheme for eligible SME customers, overseen by an independent monitor, Sir William Blackburne.”
He added: “We are investigating the matters arising from the Skilled Person’s Report and are focussing on whether there is any basis for further action within our powers.”
Ross McEwan, chief executive of RBS, apologised for the bank’s failings and pointed to the FCA’s remarks that the remediation steps announced by RBS in November were “appropriate”.
He said: “We have acknowledged for some time that mistakes were made and have apologised that we did not always provide the level of service and understanding we should have done for these customers in the aftermath of the financial crisis.
“The culture, structure and way RBS operates today have all changed fundamentally since the period under review. We have made significant changes to deal with the issues of the past, so that the bank can better support SME customers in financial difficulty whilst also protecting the bank’s capital.”
Skilled Persons’ reports are commissioned by the FCA to diagnose and monitor issues in firms and are subject to conditions of confidentiality. However, following weeks of mounting political pressure on the regulator to disclose its findings, the FCA said it acknowledged the public interest in this case and decided to publish an interim summary of the report’s findings.