The Financial Conduct Authority (FCA) has been accused of putting banks’ interests first after it refused to publish an explosive report about the actions of the Royal Bank of Scotland’s global restructuring group (RBS GRG).
Kevin Hollinrake, a Conservative MP and co-chair of the All Party Parliamentary Group on Fair Business Banking, demanded the FCA publish the report “without delay”.
He said: “What we need is a regulator with teeth and who is prepared to bite. What we seem to have is a regulator who first seeks the approval of the banks they are regulating before acting.”
The City watchdog on Friday said it would not be able to publish the report on RBS GRG because it legally needed the consent of all potentially identifiable individuals in the report, in spite of RBS bosses last month agreeing they would not block it.
However, the FCA must give the report to MPs on the Treasury Select Committee by the end of the week. The MPs, led by Nicky Morgan, will be able to use parliamentary privilege to publish it during their next session, on Tuesday 20 February, if they choose.
The report, carried out by consultants Promontory, was commissioned four years ago to investigate the behaviour of RBS staff at the unit, who allegedly engaged in systematic efforts to profit at the expense of their customers, many of whom were small business owners. One 2009 memo, entitled “Just Hit Budget!”, told staff to “let customers hang themselves”.
Liberal Democrat leader and former business minister Vince Cable told City A.M. that the impending publication of the report was "long overdue" and criticised the FCA's approach to the issue.
“This is far too cautious and there is a serious worry that the regulator has been captured by the banks, a worry that goes back to the dismissal of Martin Wheatley, the former head of FCA, who ruffled feathers.”
Wheatley was ousted from the FCA by then chancellor George Osborne in 2015, amid accusations that he was "scalp hunting" bankers with hard-line policies.
The FCA has published a summary of the report, but MP Clive Lewis last week said it was only a “sanitised” version, after claiming to have seen a leaked copy.
Lewis said the delay was "completely unacceptable" for the "thousands of small and medium-sized businesses and their workers who deserve to know the truth about what RBS did."
Referring to the type of report commissioned, which is not usually meant for publication, Lewis added: “The FCA has questions to answer about why a S166 review was used in the first place, given the gravity and scale of the accusations.
"And the process of the S166 review, whereby RBS was given a say over who is appointed as well as influence over the investigation itself, is utterly inappropriate. As things stand the FCA’s actions on this matter do not inspire confidence."
Nikki Turner, a director of the SME Alliance, a group set up by victims of frauds involving multiple big banks, said the FCA’s refusal to publish the report may have affected legal cases stemming from the scandal by denying small businesses access to important evidence.
And Hollinrake said: “It is clear that many businesses and lives have been torn apart by RBS and the least the regulator could do is give these people access to the whole truth.”
He added: “The report should be released without delay so that the public, press and parliamentarians can hold those responsible for this scandal to account in a way that the FCA seem unwilling to do.”
The FCA declined to comment.