Regulator decides no further action will be taken against RBS despite its treatment of customers falling ‘well short’ of standards

No action will be taken against Royal Bank of Scotland and its senior managers over the activities of its controversial Global Restructuring Group (GRG) despite the fact its treatment of customers “fell well short” of high standards, the regulator has said.

The Financial Conduct Authority said its powers were very limited and that there were no “reasonable prospects of success” when it came to action against senior managers.

Earlier this year, a full 362-page report was published about the actions of the unit of Royal Bank of Scotland (RBS) which detailed the “inappropriate treatment” of small and medium businesses. This happened several years after a Yorkshire entrepreneur first exposed issues.

Lawrence Tomlinson in 2013 authored the Tomlinson Report, which first exposed the unfair treatment of businesses in RBS’s turnaround division.

Some firms said they were pushed into bankruptcy and were stripped of their assets after they were transferred into the controversial division between 2008 and 2013.

RBS has so far offered a total of £125m to victims of GRG.

RBS chairman Sir Howard Davies told the BBC that the bank would await the publication of the FCA’s full account and would “reflect carefully on its findings to learn any further lessons from what was a hugely challenging time for the bank, its customers and the wider economy.”

Andrew Bailey, FCA chief executive, said: “Given the serious concerns that were identified in the independent review it was only right that we launched a comprehensive and forensic investigation to see if there was any action that could be taken against senior management or RBS. It is important to recognise 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.

“Taking action was therefore always going to be difficult and challenging but 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 have consulted with independent, external leading counsel who has confirmed that the FCA’s conclusions are correct and reasonable. I appreciate that many GRG customers will be frustrated by this decision but we have explored all the options available to us before arriving at this conclusion.

“The fact that we can’t take action in no way condones the behaviour of RBS. We expect high standards from the firms we regulate and RBS fell well short in its treatment of GRG customers.

“We feel strongly that those companies that have suffered loss as a result of how they were treated whilst in GRG must be appropriately compensated. We are closely monitoring the complaints process overseen by Sir William Blackburne, an independent third party, to ensure that things are put right.

“Although commercial lending to SMEs is not regulated by the FCA, the Senior Managers Regime (introduced in 2016) means that we are now able to hold senior management of banks to account for the way that they treat their SME customers and the FCA will do that.”

Lawrence Tomlinson did not wish to comment further. A spokesman said he had done as much as he can on the topic over the past four years and pushed as hard as possible for a resolution for impacted businesses.