Small Firms Deserve Whole Truth About Royal Bank of Scotland Global Restructuring Group

The head of the financial group appointed to report on treatment of small firms by the Royal Bank of Scotland (RBS)’s Global Restructuring Group (GRG) has told the Treasury Select Committee that GRG placed customers “on a pathway to insolvency”.

Questioned by Committee Chair Nicky Morgan this morning about Promontory’s recommendation that its report findings should be published in full, Managing Director Tony Boorman responded, “I’ve always said… in public life, the more one can put in the public domain, the more everyone can be clear about the facts”.

Boorman also confirmed that he felt conditions had been met to move to a second phase of investigation into GRG. The head of the Financial Conduct Authority (FCA) Andrew Bailey stated in the Autumn that this second phase “could lead to enforcement action.”

When discussing GRG’s dealings with very small businesses that did not possess financial expertise, RBS CEO Ross McEwan commented, “let me be quite clear with the Committee, we did not do a good job.”

Federation of Small Businesses (FSB) National Chairman Mike Cherry, said: “Three and a half years on from the commissioning of Promontory’s GRG report and we’re still yet to see its findings in full, despite the author’s recommendation that they should be published. It’s time that those small business owners who had their lives destroyed by GRG finally had the truth about who knew what. After ten years, it’s the least they deserve. 

“In the Autumn we had the promise of a more in-depth investigation into GRG and we’re yet to see any progress on that. The FCA must make pressing on with this second, more detailed phase of GRG investigation a priority.

“The question now is how do we prevent another GRG in future? With that in mind, we’ll be responding to the FCA’s consultation on the Financial Ombudsman in the coming weeks.

“Given that the FCA is not recommending an extension of regulation to small business lending, increasing the Ombudsman award limit or providing access to its redress system for firms that have gone into liquidation, it’s hard to see how its proposals would protect victims of a future GRG-type scenario.

“The whole FCA framework is underpinned by this idea that small business owners have considerably more financial expertise than the average consumer. The regulator needs to understand that small firms are far more like consumers than big corporations. They don’t have financial expertise on tap and, as GRG has tragically shown, they need real protections in this space.”