SME Alliance goes after RBS bosses over GRG scandal with new probe

The small business group, which campaigns for fair treatment of customers by banks and advisers, says it is launching its own investigation into the now notorious GRG, which has already been the subject of multiple probes since the companies put under its “care” accused the Edinburgh-based lender of pushing them into insolvency so that it could strip them of their assets on the cheap.

Last month the Financial Conduct Authority (FCA) ruled out any prospect of punishing RBS over the conduct of the unit, which was meant to assist small and medium-sized enterprise (SME) business customers but instead resulted in the bank being hit with millions of pounds of compensation costs as a result of its malpractice.

In January the FCA was forced into a dramatic u-turn on its decision not to publish the findings of its confidential report on the scandal.

But last month, despite the City watchdog’s chief executive Andrew Bailey listing a series of serious failures on the part of RBS that “might ordinarily trigger disciplinary action”, he declared that such steps would not be taken in this case because the business was not subject to current regulations at the time of its operation.

Speaking at the end of July, Mr Bailey said: “Given the serious concerns that were identified in the independent review it was only right that we launched a comprehensive and forensic investigation to see if there was any action that could be taken against senior management or RBS. It is important to recognise that the business of GRG was largely unregulated and the FCA’s powers to take action in such circumstances, even where the mistreatment of customers has been identified and accepted, are very limited. Taking action was therefore always going to be difficult and challenging but after carefully considering all the evidence we have concluded that our powers to discipline for misconduct do not apply and that an action in relation to senior management for lack of fitness and propriety would not have reasonable prospects of success.

“We have consulted with independent, external leading counsel who has confirmed that the FCA’s conclusions are correct and reasonable.

“I appreciate that many GRG customers will be frustrated by this decision but we have explored all the options available to us before arriving at this conclusion.

“The fact that we can’t take action in no way condones the behaviour of RBS. We expect high standards from the firms we regulate and RBS fell well short in its treatment of GRG customers.”