"As we reported in November 2016, while the most serious allegations were not upheld by the Skilled Person, the report did identify other concerns about the treatment of SME customers."
GRG was a support unit for troubled businesses which came under fire in 2013 after allegations that it mistreated troubled businesses to profit from their financial hardship.
The summary reveals that although the most serious allegations made against the bank were not upheld, the FCA believes there were areas in which the inappropriate treatment of customers was 'widespread'.
The FCA says it will now "carry out a more focussed investigation" and identify whether there is any basis for further action within its powers, although commercial lending activity remains largely unregulated in the UK.
Widespread failures identified 'poor and misleading' communication, a failure to support SME businesses effectively, and placing an undue focus on pricing increases and debt reduction without due consideration to the longer term viability of customers.
In its summary, the FCA said: "The independent review identified significant concerns about SME customer treatment by RBS, and SME customers engaged with during the independent review believe very strongly that they did not receive the support they could have reasonably expected in a period of extreme financial stress for many SMEs and other businesses and for the UK and global economy more generally."
However the FCA believes that RBS "did not set out to artificially engineer a position to cause or facilitate the transfer of a customer to GRG" and that customers transferred to GRG were exhibiting clear signs of financial difficulty.
The investigation also found that there was not a widespread practice of identifying customers for transfer for inappropriate reasons, such as their potential value to GRG rather than their level of distress.
The regulator said that although it is not normal practice to publish independent skilled persons’ reports, it 'recognised the public interest in this case'. The FCA had come under increased pressure from the Treasury Committee to publish its summary after its report was leaked to the press.
The Treasury Committee has appointed a legal adviser to scrutinise the FCA's summary report with the underlying report to assess whether it is a 'fair and balanced summary'.
Andrew Bailey, FCA Chief Executive, commented: “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.
“As we reported in November 2016, while the most serious allegations were not upheld by the Skilled Person, the report did identify other concerns about the treatment of SME customers. RBS has accepted that it did not meet the standards it set for itself which impacted on how it treated some of its 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. Having considered documents and cases highlighted by the Skilled Person we agreed that RBS’s proposals, including to establish a complaints scheme, were appropriate steps.
“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. We cannot comment any further on this."
Ross McEwan, CEO of RBS, said: “I am pleased that the regulator has confirmed the findings from last November and that the most serious allegations made against the bank have not been upheld.
“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 regulator has again confirmed that the remediation steps we announced in November to address concerns for customers are appropriate. Any customer who feels they were treated inappropriately whilst in GRG should make use of the complaints process.
“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.”
Nicky Morgan MP, Chair of the Treasury Committee, added: “It has taken the FCA too long to publish its summary of the skilled persons’ report, so this is not before time. The Committee has put in place an arrangement to ensure maximum possible transparency is brought to this issue.
“When its independent adviser reports back later this week, the Committee will consider whether further steps are required.”
