U.K. MPs are criticizing the Financial Conduct Authority (FCA) after it decided not to take action against RBS despite finding that the bank mistreated small business customers, Reuters reported on Thursday (June 13).
The FCA will not fine or sanction RBS’ Global Restructuring Group after government investigations into the unit concluded that it forced some of its small businesses into administration, despite existing for the purpose of helping SMB clients out of financial trouble. Parliament Treasury Committee Chair Nicky Morgan slammed the FCA for issuing a report with these conclusions yet deciding not to penalize the bank, noting that the report would provide “no solace” for small business victims of the GRG scandal.
MP Kevin Hollinrake, co-chair of the All Party Parliamentary Group on Fair Business Banking, said the FCA’s report is “another complete whitewash,” and represents a failure of the FCA to do its job.
The FCA’s decision is receiving significant criticism, with some MPs arguing the watchdog needs more power to take action against banks that mistreat its customers. The FCA itself acknowledged it does not have the power to take further action against RBS.
“Our investigation has found that GRG clearly fell short of the high standards its clients expected, but it was largely unregulated, and so our powers to take action in such circumstances, even where the mistreatment of customers has been identified and accepted, are very limited,” said Andrew Bailey, the FCA’s chief executive, in a statement.
A previous report from the FCA found the GRG was responsible for widespread mishandling of small business customers between 2008 and 2013, reports said.
Reuters noted that the criticism could hurt Bailey’s path toward the Bank of England as he pursues the central bank’s governor position when current Governor Mark Carney steps down.
SME Alliance, a small business advocacy group, said in another statement it was “deeply disappointed” with the FCA’s decision not to issue fines or other penalties to RBS.