FCA considering action against RBS over treatment of small businesses
24 October 2017
The Financial Conduct Authority (FCA) is considering whether action could be taken against Royal Bank of Scotland over its treatment of small business customers in the five years after the 2008 banking crisis.
In a published summary of a report it commissioned on the bank's controversial global restructuring group (GRG), the FCA pointed out that lending to small businesses and other companies was largely unregulated.
However, according to Andrew Bailey, chief executive of the FCA, the regulator was investigating matters arising from the report and focusing on whether there was ''any basis for further action within our powers''.
The FCA has come under intense political pressure in recent weeks to publish the full ''skilled persons'' report, known as section 116, which was commissioned from a specialist consultancy called Promontory.
The appointment in 2014 came in response to allegations that the bank deliberately wrecked small business to make profits. The allegations were contained in a dossier compiled by Lawrence Tomlinson, a businessman who was an adviser to the then business secretary Sir Vince Cable.
The FCA had initiated a general investigation last November but said its work was now ''more focused''. It added it had been looking at what ''RBS management actually knew or ought to have known''.
Meanwhile, the RBS has paid out £115 million in compensation to businesses over "complex fees" due to the long-running scandal over alleged mistreatment of customers.
The development comes after a legal claims group slammed the financial regulator for presiding over what "appears to be a whitewash" over RBS saying it failed to acknowledge "serious and deliberate harm" it said was caused by the bank division that dealt with struggling businesses.
RBS confirmed that the potential bill for compensation claims to small business customers would be expected to remain at £400 million. The compensation scheme was set up by the Edinburgh-based bank last year after allegations its now defunct Global Restructuring Group (GRG) mistreated 12,000 companies it was supposed to help.