Wednesday 5 December 2018 4:20 pm

City watchdog taken to court over failure to act in Royal Bank of Scotland GRG scandal

A Scottish businessman is taking City watchdog the Financial Conduct Authority (FCA) to court over its role in the investigation into the Royal Bank of Scotland’s restructuring unit.

According to court documents, frequent RBS critic Neil Mitchell has filed an application for a judicial review of the FCA’s decision not to sanction anyone from RBS’s global restructuring group (GRG), which was found to have taken advantage of small businesses that were in distress.

A report by the FCA into the RBS GRG’s conduct was published in February, showing that “there was widespread inappropriate treatment of customers by GRG”.

Nicky Morgan, chair of the treasury select committee, called its findings "disgraceful".

However, the FCA said it was unable to take action against RBS or its bankers because the powers it possessed at the time did not allow it to.

A spokesperson for the FCA said: ‘Our statement in July explained 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.

“After carefully considering all the evidence we have concluded that our powers to discipline for misconduct do not apply and that an action in relation to senior management for lack of fitness and propriety would not have reasonable prospects of success.

“We will not comment on the application seeking to review this decision while it is pending.”

RBS, which was also named as an interested party in the case, declined to comment.

Mitchell previously unsuccessfully sued RBS after claiming that it drove his software company Torex into administration.

He is closely linked to the controversial RBoS Shareholders Action Group, which won a £200m settlement from RBS in relation to a rights issue at the time of the financial crisis that left many shareholders out of pocket.

However, shareholders have not received their compensation amid ongoing legal wrangling over how to divide the settlement.

Mitchell, a vocal supporter of the group, has regularly attacked journalists and opposition lawyers on Twitter for their perceived hostility.

One of the central figures in the action group is Irish businessman Gerard Walsh who was described as a fraudster by the Irish High Court in 1997 and the Royal Court of Jersey in March 2010.

Walsh is claiming £3.5m for his work on the case, in addition to the £80 per hour in consultancy fees that he has charged for his work on the case since March 2009.