Kevin Hollinrake, who is co-chairman of the All Party Parliamentary Group on Fair Business Banking (APPG), made the comments after it was revealed that Royal Bank of Scotland and its senior managers will not face disciplinary action over the treatment of small firms in its global restructuring group
The Financial Conduct Authority (FCA) said it had concluded that its powers to discipline anyone for misconduct do not apply and added that action against senior management in the global restructuring group for lack of fitness and propriety “would not have reasonable prospects of success”.
It said it had taken independent, external legal advice on its decisions, which found that GRG’s activities were not within its remit and confirmed “the FCA’s conclusions are correct and reasonable”.
FCA chief executive Andrew Bailey said: “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.”
He added: “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.”
In a statement, the APPG said it was extremely disappointed, but largely unsurprised, by this announcement.
It added: “It is simply not good enough from a regulatory perspective to say that the powers to hold individuals to account simply do not exist.”
Mr Hollinrake, who is the MP for Thirsk and Malton, said: “The FCA should release all findings and evidence they have obtained in their investigation of RBS GRG, unredacted so that the individuals who are responsible for this misconduct are in the public domain.
“The FCA have an obligation to release this information so that politicians can have a say in whether it is truly the case that no further actions can be applied. As lawmakers we have an obligation to the public to ensure that those who are responsible are accountable and not untouchable, as indeed is the case now where the individuals responsible are protected by the regulatory inadequacy of our current system”.
A much-anticipated independent report into GRG by Promontory Financial Group was finally published earlier this year, showing that there was “widespread inappropriate treatment of customers” inside the unit.
However, it said there was no evidence that “defaults were engineered to transfer businesses to GRG simply to generate revenue for RBS through fees”.
The FCA also said it found no evidence of dishonesty or lack of integrity.
But Mr Bailey said: “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.
“We feel strongly that those companies that have suffered loss as a result of how they were treated whilst in GRG must be appropriately compensated.”