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FCA orders RBS past business review

The FCA has ordered Royal Bank of Scotland to carry out a past business review following claims the bank put viable businesses into default so it could make more profit.

The FCA says it has agreed with RBS that a section 166 report, or skilled persons report, should be carried out, and says it may take further regulatory action as a result.

FCA director of supervision Clive Adamson says: “These allegations, if proved, raise serious concerns about how banks treat their customers.

“An SME’s relationship with its bank is essential for any business to have a chance to succeed, and claims like the ones made threaten to undermine that. We expect all firms to act with integrity and put customers at the heart of their business.”

Commercial lending is not a regulated activity under the Financial Services and Markets Act. But the FCA says the allegations gave it concerns as to whether RBS has treated customers appropriately, in particular those in financial difficulties.

It says if substantiated, such allegations may indicate wider concerns in relation to governance and culture within RBS. 

The FCA has also sent a letter to all other relevant banks seeking confirmation that they are satisfied they do not engage in any of the poor practices alleged in the reports.

Earlier this week Business Secretary Vince Cable passed a report into claims RBS put viable businesses into default to financial regulators.

The claims focus on a part of RBS called the Global Restructuring Group, which was set up to help struggling companies.

But firms have said GRG imposes fines, hikes interest rates and withdraws loans. They claim RBS’ property arm West Register then buys their properties at a fraction of their value.

Earlier this week RBS announced it had appointed law firm Clifford Chance to carry out an inquiry into the claims in the report, written by Cable’s adviser Lawrence Tomlinson, and a separate review of the bank’s SME lending practices.

The SME lending review, commissioned by the bank and written by Sir Andrew Large, found a “small proportion” of customers have a strongly negative perception of RBS, particularly relating to its treatment of customers in financial distress.

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Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. This alleged truly disgraceful conduct is the sort of thing the FSA should really have been looking at! But of course if Sants had given them a hard time would Barclays have given him a job! Me, cynical, never???

  2. So let me see. RBS are caught behaving like bandits… allegedly. The FCA says ‘it’s not really our problem’ and tells RBS it had better investigate itself. So they hire Clifford Chance to defend themselves under cover of a ‘review’. How terribly cosy.

    Meanwhile the FCA write to all the other banks to alert them to be ready in case they have to challenge them later for the stuff we all know is going on but no one can prove…. Burn the files chaps – the investigators are coming. Shades of Coulson and Brooks.

    It this the FCA’s idea of ‘regulating’ the banks?

    The words ‘Banking Standards Committee’ and ‘Orange jump suits’ spring to mind. Now or never Andrew Tyrie?

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