Update on the FCA’s review of RBS’s treatment of SME customers referred to its Global Restructuring Group

In November 2013 Dr Lawrence Tomlinson published a report Banks’ Lending Practices: Treatment of Businesses in distress. This made serious allegations against RBS over the treatment of SME customers transferred to GRG.

In January 2014, the FCA appointed Promontory as a Skilled Person under section 166 of the Financial Services and Markets Act 2000 (FSMA) to conduct an independent review of RBS’s treatment of SME customers transferred to GRG between 2008 and 2013. Promontory, with the assistance of its sub-contractor Mazars, provided its final report to the FCA in September 2016 (the Skilled Person’s Report). In November 2016 we published a high level summary of the main findings and the key conclusions of the Skilled Person’s Report.

Andrew Bailey, FCA Chief Executive commented:

“Commercial lending activity is largely unregulated in the UK but given the seriousness of the allegations against RBS it was appropriate for us to look at their treatment of SME customers.

“As we reported in November 2016, while the most serious allegations were not upheld by the Skilled Person, the report did identify other concerns about the treatment of SME customers. RBS has accepted that it did not meet the standards it set for itself which impacted on how it treated some of its SME customers.  RBS has since taken voluntary steps, such as its proactive review of complex fees, and setting up a complaints scheme for eligible SME customers, overseen by an independent monitor, Sir William Blackburne. Having considered documents and cases highlighted by the Skilled Person we agreed that RBS’s proposals, including to establish a complaints scheme, were appropriate steps.

“We are investigating the matters arising from the Skilled Person’s Report and are focussing on whether there is any basis for further action within our powers. We cannot comment any further on this."

Publication of Skilled Persons’ reports

Skilled Persons’ reports are commissioned by the FCA to diagnose and monitor issues in firms and are therefore subject to conditions of confidentiality.  The contents of such reports are subject to a wide prohibition on disclosure in the legislation which governs the FCA’s activities.  In effect, this means that Skilled Persons’ reports are not published.

However, recognising the public interest in this case, the FCA has prepared this interim summary of the findings and conclusions of the Skilled Person’s Report.

The interim summary has been validated by independent Counsel as a fair and balanced representation of the Skilled Person’s Report.

Publication of a Skilled Person’s Report by the FCA would only be possible with the consent of institutions and individuals covered by the report.  We have obtained the consent of RBS and Promontory to publication of the interim summary. However, publication of the Skilled Person’s Report itself is still not possible. We have not sought consent from the individuals or groups of individuals who are identified in the Skilled Person’s Report as that would necessitate consulting each individual and considering any comments they made on the text that affected them.  Our experience of previous reviews carried out by the regulators is that that would be a complex and lengthy process and, where consents were not forthcoming, would likely result in only a heavily redacted version of the Skilled Persons’ Report being publishable.

Following consultation with the Treasury Select Committee (TSC) the FCA has provided Counsel appointed by the TSC with the Skilled Person’s Report and other documents. TSC’s Counsel will assess whether the interim summary published today is a fair and balanced summary of the Skilled Person’s Report. Following that assessment the FCA will publish a final version of the account making clear anything that has changed as a result of the TSC’s Counsel’s review.

The interim summary does not reproduce any individual documents the Skilled Person drew to the FCA’s attention, or extracts from the Skilled Person’s individual case assessments.  This is because they contain information subject to the wide restriction on disclosure referred to above as well as personal data, and some of them may be relevant to the ongoing investigation work.

Notes to editors

1. The interim summary[1] (PDF)
2. Details of RBS’s complaints process and refund of complex fees for SME customers in GRG[2]
3. On 1 April 2013, the FCA became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).
4. The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.
5. Find out more information about the FCA[3].