Treasury Committee publishes full FCA report into RBS

"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"

The Committee had set the FCA a deadline of the 16th of February to either publish the report or send it to the Committee.

The FCA chose the latter and the Committee has today released the full report, stating that it "has not taken the decision to publish lightly".

Reports prepared under section 166 are usually confidential, however the Committee said there was "overwhelming public interest in bringing transparency to what happened at GRG" due to the report being leaked to the press in September 2017.

Nicky Morgan, chair of the Committee, said it was important to ensure that "everyone can see, and know that they are seeing, an authentic and verified copy" of the original report.

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 report says it did not find that defaults were engineered to transfer business to GRG simply to generate revenue for RBS through fees, increased margins and the acquisition of undervalued assets.

However it said that "equally importantly, overall we did find that RBS's SME customers were poorly served by GRG".

The FCA found "widespread inappropriate treatment of customers by GRG; that this inappropriate treatment was not confined to failures in process; and that in a significant proportion of cases - one in six - that treatment appears likely to have caused material financial distress".

Morgan commented: “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 Treasury Committee has now begun an inquiry into SME finance, which will examine regulation, funding options, and the ability of SMEs to resolve disputes and access fair and reasonable compensation when they borrow money.

Morgan continued: “We have today published the terms of reference for our inquiry into SME finance. We’ll examine what must change to prevent what occurred at GRG from ever happening again, and how to restore confidence among SMEs in banks as a source of finance. I encourage all those with views to submit evidence.

“As well as continuing to monitor the FCA’s further investigation into GRG, we’ll keep a close eye on RBS’ Complaints Process to determine whether it is providing the fair and reasonable compensation that has been promised to mistreated customers. Any person referred to in the report is invited to make any observations to the Committee.”