B2B Payments

MPs Slam Finance Watchdog For Omission In RBS SMB Scandal Summary

U.K. members of parliament (MPs) say managers at Royal Bank of Scotland (RBS) knew — or, at least, should have known — about alleged mistreatment of small and medium-sized businesses (SMBs), according to reports in the Financial Times.

Parliament is also claiming that the Financial Conduct Authority (FCA) omitted this realization from its summary report of the RBS investigation, which examined the role of RBS’s Global Restructuring Group (GRG) in the demise of some of its SMB customers.

Liberal Democrats leader Sir Vince Cable pointed to former GRG head Nathon Bostock, in particular, as Bostock led the restructuring and risk at the financial institution (FI) until 2013. He currently serves as chief executive officer at Santander U.K.

Cable said Bostock is “responsible” for the strategy that accusers claim forced SMBs into the GRG and then imposed fees that pushed those small firms further into financial troubles, despite the GRG’s purpose of rehabilitating financially struggling companies. According to Sir Vince, the independent review “contains the following incriminating phrase: ‘management knew, or should have known, that this was an intended and coordinated strategy and that the mistreatment of business customers was a result of that.’”

The FCA did not include the finding when it released a summarized overview, a summary which launched amid criticism for not publishing the entire report.

“My question is, why was this left out of the summary by the FCA?” asked Liberal Democrat MP Normal Lamb. “Because it potentially makes the FCA complicit in the cover-up.”

“The FCA has clearly stated why it didn’t include that section, and this was supported by the independent reviewer, Andrew Green QC, who saw considerable force in the FCA position,” the FCA responded in a statement. “Any suggestion that the FCA is complicit in any coverup is clearly nonsense.”

Sir Vince raised the issue in Parliament during a debate surrounding the now-shuttered GRG, and some policymakers are now calling for a full investigation. Commons Treasury committee Nicky Morgan reportedly proposed that corporate lending be placed under the watch of the FCA, and that the government establish a special tribunal to mediate conflicts between banks and small business borrowers.

The FCA did reveal in its summary that it found RBS took “inappropriate action” with 92 percent of viable SMBs placed in the GRG.

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