Another Regulatory "whitewash" in the GRG Scandal

After taking phase 2 of the inquiry into RBS GRG in-house, the FCA have today confirmed that they will not hold any senior managers to account for the “widespread” “inappropriate treatment” of customers and have said they “cannot say” whether they would have been able to bring a successful case against Senior GRG managers for the mistreatment of their SME customers under the Senior Managers Regime.

Kevin Hollinrake MP, Co-Chair of the APPG on Fair Business Banking, said: “This report is another complete whitewash and another demonstrable failure of the regulator to perform its role. Phase 2 of the FCA’s own Final Requirement Notice was supposed to “consider the root causes” and establish whether “the causes of such treatment were known about, authorised by and/or sanctioned by management within RBS Group”. They have manifestly failed to do this.

In its statement last year of 28th July 2018, the FCA concluded that its “powers to discipline for misconduct do not apply”. It could find “no evidence of dishonesty, lack of integrity” any “absence of competence or capability”, anyone acting “recklessly or with a dodgy “ethical compass” and did not “make findings about misconduct” amongst the senior management team. How then did the UK’s biggest ever banking scandal take place? The FCA must now publish a full account of its findings including naming those responsible for the shameful mistreatment of thousands of UK SMEs.

The FCA have dodged the million-dollar question: Would they have been able to take action against GRG senior managers for the misconduct experienced by thousands of SMEs if the Senior Managers Regime had been in place at the time. It will be of great concern for consumers, parliamentarians and the government that the FCA have refused to say whether their flagship policy would have been used to hold senior managers to account for the most egregious and damming banking scandal of recent years that has cast a vast shadow over the banking sector.”

Guto Bebb MP said: “The victims of this terrible scandal will feel robbed once more. Phase 2 of the inquiry was intended to get to the bottom of what happened, which senior managers were involved, the root causes and whether there was any influence of any external stakeholders. These questions remain unanswered. The report does, however, make one element of the scandal clear: the APA had the ear of senior GRG managers and were influencing them to “flog” their SME customers “for next to nothing”, with potentially devastating results.”

Professor David McIlroy, Head of Chambers and Forum Chambers, said: “The report recognises, at last, the inequality of bargaining power between SMEs and big banks and that the owners of SMEs would have expected that their businesses would receive similar protections to retail customers. It fails, however, to draw the obvious conclusion that SMEs should be able to sue for breach of the regulatory rules which are supposed to apply to all customers classified as retail clients. Moreover, the regulator refuses to express a view about the reasonableness of the contractual clauses which RBS used to force customers into GRG or as justification for closing businesses down.”

Leave a reply

Your email address will not be published.