MPs minded to publish widely leaked FCA report which details banks ‘endemic’ mistreatment of customers
A confidential report into Royal Bank of Scotland is set to be published by MPs after it was widely leaked, revealing details of the bank’s treatment of nearly 6,000 struggling small businesses in the aftermath of the 2008 banking crash.
The Commons Treasury select committee has been locked in a stand-off with the Financial Conduct Authority, which wrote the report, after giving the City watchdog until Friday to either publish it in full or share it with MPs.
The FCA, which had published a redacted version, is not expected to yield to the committee’s demand.
But MPs are understood to be leaning towards publishing the document, a version of which has been seen by the Guardian, once they receive it. It details allegations of “endemic” behaviour by staff in RBS’s Global Restructuring Group (GRG) division that managers should have been aware of.
The division’s treatment of clients led to financial distress for companies whose finances it was meant to be restructuring in a bid to help them survive, the report said.
According to the report, one GRG manager was accused of threatening the boss of a company in financial difficulty with receivership.
GRG staff were also alleged to have applied pressure on a businessman to increase the price he needed to pay to regain control of his company from £400,000 to £2m, by using the “Kissinger school of negotiation”.
The phrase is thought to be a reference to the hardball tactics deployed by former US secretary of state Henry Kissinger.
When deciding what fees to charge small firms on their loans, GRG staff were told to “pick a number, any number”, according to the full version of the report.
Portions of the report that have been leaked previously showed that staff in GRG were told to let businesses “hang themselves”.
An internal memo referred to struggling companies – many of which had been damaged by the banking crisis – as “basket cases”, while staff were advised that “missed opportunities will mean missed bonuses”.
The FCA’s investigation into GRG was prompted by allegations in 2013 from businessman Lawrence Tomlinson, who claimed that the division drove businesses into the ground for profit.
The report did not find that RBS deliberately undermined companies for profit. But it says there was widespread inappropriate treatment of firms by GRG, including in one in six cases (16%) that it “appears likely to have caused material financial distress”.
RBS chief executive Ross McEwan has previously condemned the behaviour of staff within the division, including the memo advising staff to let firms “hang themselves”, which was entitled: “Rope.”
“For the avoidance of doubt, the language used in this document was completely unacceptable and the bank does not condone it,” he said.
The bank has said that in most cases, firms did not suffer “material financial distress” due to GRG’s actions.
An FCA spokesperson said: “A leaked version of the report does not change the FCA’s obligation to comply with the law in order to get the report published. The FCA wrote to the Treasury committee last week to set out the next steps we are taking.”