Former Government adviser welcomes decision to publish full report into RBS unit

A FORMER Government adviser has welcomed the announcement that the City watchdog plans to publish the full report detailing failings at Royal Bank of Scotland's controversial Global Restructuring Group (GRG).

Lawrence Tomlinson
Lawrence Tomlinson

Yorkshire businessman Lawrence Tomlinson, who served as an entrepreneur-in-residence for former Business Secretary Vince Cable, said he hoped the report would hold individuals to account.

Mr Tomlinson, who has published his own scathing account of the way RBS managed its relationships with some small businesses, said: “It is important that we find out who RBS has been trying to protect and whether there was a specific instruction by senior management to restructure the bank using GRG.

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“Remember, the ‘bank’ didn’t do this to SMEs (small-and-medium-sized enterprises), bankers did. It is time they faced the penalty for their actions.”

Royal Bank of Scotland’s restructuring business did not turn around the “vast majority” of small businesses it worked with, chief executive Ross McEwan said on Tuesday in response to MPs’ questions.

Mr McEwan and RBS Chairman Howard Davies were grilled by members of the Treasury Select Committee, which has challenged state-backed RBS on its treatment of troubled small businesses during and after the financial crisis. RBS’s Global Restructuring Group (GRG) handled around 12,000 struggling firms between 2007 and 2012, some of which accuse the bank of pushing them into bankruptcy to pick up their assets on the cheap.

The Financial Conduct Authority (FCA) said it was “content” to publish the full report into the GRG unit on the basis that RBS would not block the move, and would start approaching individuals identified in the report to grant their permission.

It marks a U-turn for the Financial Conduct Authority (FCA) which had previously refused on grounds that the skilled persons or Section 166 review - which collects insight about a firm’s activities from third parties - would mean revealing confidential information about the individuals who contributed to it.

But the FCA changed its mind just hours after Treasury Select Committee chair Nicky Morgan pushed RBS bosses on whether they would give permission for the report’s release.

Mr McEwan told MPs on Tuesday: “Should the FCA want to report it, we will not object.”

“I will let Andrew Bailey know that as well.”

Up to this point, only a summary had been provided by the FCA, despite its leak to the likes of the BBC.

In its own statement the FCA said: “The FCA welcomes the statement by Royal Bank of Scotland, given at today’s Treasury Committee hearing, that they will not object to the FCA publishing the s166 report into the treatment of small and medium-sized enterprise customers transferred to its Global Restructuring Group.”

The All Party Parliamentary Group on Fair Business Banking and Finance said it welcomed the “intelligent and focused” scrutiny by members of the Treasury Select Committee into the Section 166 investigation at the RBS GRG division.

In a statement, the group said: “The APPG is concerned that there is too much focus on blaming the victims, and not enough emphasis on restitution and compensation for business people whose lives have been ruined.”

Co-chair Kevin Hollinrake MP said: “There seems to be a new problem in almost every rock you turn over.

“Small businesses who have been mistreated must have access to an impartial, independent and truly transparent process. This is not the case at the moment and our group will do everything in its power to make sure an appropriate new process of redress is established.”

The co-chairman Norman Lamb MP said the hearing reinforced the need for a full independent inquiry into the treatment of SMEs by RBS.

He added: “We need a strong independent tribunal established to determine liability.”

RBS had previously claimed the vast majority of businesses were successfully turned around by GRG, but chief executive Ross McEwan has admitted the definition included those businesses going into liquidation.

Mr McEwan told the Treasury Select Committee: “Let me be quite clear with the committee: we did not do a good job with these customers and the report shows that - we did not do a good job.

He added: “At the time when they were in most need of help this organisation in many, many cases and far too many cases was not there giving them the help they needed.”