FCA decides to publish highly critical GRG report after RBS bosses say they will not object

Jasper Jolly
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RBS chairman Sir Howard Davies and chief executive Ross McEwan were grilled by MPs

The Financial Conduct Authority (FCA) will publish a highly critical report into the actions of a unit of Royal Bank of Scotland (RBS), after the lender's bosses today indicated they will not object.

RBS chief executive Ross McEwan told MPs on the Treasury Select Committee: "We will not object."

The report – which has already been leaked – reportedly shows a litany of ethical failures by the global restructuring group (GRG), which is accused of deliberately charging high fees to struggling businesses to maximise the bank’s return, among other allegedly dishonest practices.

Read more: "Rope: Let customers hang themselves" Shocking RBS-GRG memo revealed

The FCA, the City watchdog, said it welcomed the bank's position on the report, and said it will publish it after it has acquired the consent of the authors and individuals identified. This will not happen until the FCA's own investigation is completed.

McEwan today admitted the GRG did not turn around the “vast majority” of businesses, as he previously said in a statement in 2014. The statement is not correct if applied to the specific and limited group of businesses being looked at by the FCA investigation, he said.

He said “it is not true” that a majority of firms were turned around, adding that some of the businesses previously described as turned around had in fact entered insolvency.

Read more: Did RBS abuse its turnaround process? We deserve to know

Only one in every 10 businesses in GRG returned to normal banking relations.

“We did not do a good job with the customers,” McEwan said. “At the time when they were in most need of help this organisation in many, many cases, in far too many cases, was not there giving them the help they needed.”

One internal RBS memo which was finally published this month told staff they needed to give companies “rope” with which they could “hang themselves”.

Referring to the 2009 memo, entitled “Just Hit Budget!”, RBS chairman Sir Howard Davies said he was “acutely embarrassed” by the document.

Read more: Watchdog to probe RBS further over restructuring unit

“They are the stuff of which nightmares are made as far as a chairman or a chief executive are concerned,” Davies said today. “We can do nothing but abase ourselves as far as that’s concerned. It’s absolutely awful”

Labour MP John Mann, a member of the Treasury Select Committee, accused some RBS executives of “lying to Parliament”.

After the hearing, referring to evidence from former GRG bosses, Mann said: “RBS executives have misled Parliament in the past. It is clear that both their integrity and ethics are in doubt."

GRG officials had a focus “almost entirely on the commercial interests of the bank”, rather than the clients they were meant to be helping, according to Tony Boorman, managing director of the Promontory Financial Group.

Boorman, who was commissioned to carry out a review of GRG’s practices, told MPs his firm’s report was created in a way it believed would make it legally publishable, but added that RBS continues to dispute some of the findings.

Read more: Vince Cable names Santander UK boss in RBS scandal discussed in Parliament

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