Treasury Select Committee members Jacob Rees-Mogg, Rachel Reeves and Wes Streeting keep close eye of Royal Bank of Scotland legal defence costs

 
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Jacob Rees-Mogg is a Tory MP and member of the Treasury Select Committee (Source: Getty)

Three members of the influential Treasury Select Committee have indicated they will be closely following the upcoming Royal Bank of Scotland legal battle.

More than 27,000 retail investors, including 4,000 current staff, are taking the bank and several former executives to court on 22 May. They believe they were misled by the bank at the time of a £12bn rights issue in 2008, shortly before it had to be rescued by the government.

The lender, which is more than 70 per cent owned by the taxpayer, is set to rack up legal costs of more than £125m on the case, with at least £6.5m going towards defending former execs, including disgraced banker Fred Goodwin.

Read more: We’d all be better off if the government sold its stake in RBS at a loss

Jacob Rees-Mogg, a prominent Tory member of the MP committee, said: “This affair is being closely watched by members of the Treasury Select Committee and is the type of issue the committee may well look into once legal proceedings are completed.”

Labour’s Rachel Reeves said: “[Chief executive] Ross McEwan must explain to RBS’ investors and the public why his bank is spending millions of pounds of what is ultimately taxpayers’ money on defending Goodwin.”

An RBS spokesman said: “It is normal practice under company law that directors would be indemnified in relation to any third party legal action arising from their tenure at the bank.”

Read more: RBS offers to sweeten the deal for shareholder action group

Wes Streeting, also a Labour MP, added: “RBS is waging a legal war against 27,000 small investors who have spent years trying to get justice. It’s both a grotesque waste of money and a bullying tactic. And it’s all the more concerning because taxpayers are footing the huge bill.”

He also called for McEwan to give assurances to RBS staff that there will be no repercussions from the case.

An RBS spokesman said: “We understand that thousands of members and former members of RBS staff are taking part in these pre-existing proceedings and the bank has in no way discouraged their participation.”

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