Business owners launch last-ditch effort to force action against Royal Bank of Scotland GRG bankers
Business owners who claim to have been mistreated by Royal Bank of Scotland (RBS) are writing a new report on the bank’s alleged misconduct in a last-ditch effort to force regulators to take action against senior bankers.
The group, SME Alliance, said its report will cover new evidence of events in RBS's global restructuring group (GRG), after the Financial Conduct Authority (FCA) last month said it had exhausted all avenues for potential regulatory action.
The GRG scandal rocked RBS, producing a stream of negative publicity for the bank concerning its treatment of struggling small business customers. One memo from a former banker told colleagues to let customers “hang themselves” and to charge inflated fees to firms they were meant to be helping turn around.
However, at the end of last month the FCA said the commercial lending activities, which were not regulated at the time of the scandal, fall outside the scope of its powers. Meanwhile, external legal advice found that no action could be taken against senior managers on conduct grounds because the scandal pre-dated the more stringent Senior Managers and Certification Regime (SMCR), introduced in 2016.
The SME Alliance report will feature new evidence not seen in previous reports carried out by the FCA, including large claims against the bank which have not been settled, City PM understands. SME Alliance is a group of small business owners who say they have been victims of misconduct by banks.
The FCA could still examine any new evidence it receives, City PM understands.
The group’s approach to try to resurrect the possibility of legal or regulatory action against RBS bankers will focus on the alleged misconduct, as well as the conduct of the bank’s leaders in handling complaints and compensation claims. The latter could potentially fall under the scope of the SMCR if it related to actions since 2016.
The report will also cover the actions of RBS’s West Register, Specialised Relationship Management and Strategic Management units.
All of those units were within the scope of the FCA’s previous investigations, with no wrongdoing found. The FCA found no evidence that “RBS artificially distressed and transferred otherwise viable SME businesses to GRG to profit from their restructuring or insolvency” or that any member of senior management was “dishonest or lacking in integrity.”
Nikki Turner, a victim of the separate HBos Reading fraud and one of the directors of the SME Alliance, said: “Our members are extremely frustrated that the regulators are unable to take any action against RBS and its bankers. The FCA says it cannot find any way to take action – we aim to help them ensure that the guilty bankers are brought to book.”
An FCA spokesperson said: “Given the serious concerns that were identified in the independent review the FCA launched a comprehensive and forensic investigation to see if there was any action that could be taken against senior management or RBS. It is important to recognise that the business of GRG was largely unregulated and the FCA’s powers to take action in such circumstances, even where the mistreatment of customers has been identified and accepted, are very limited.
“Taking action was therefore 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 for lack of fitness and propriety would not have reasonable prospects of success. We have consulted with independent, external leading counsel who has confirmed that the FCA’s conclusions are correct and reasonable.”
A spokesperson for RBS declined to comment.