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Recent disclosure of our Governance Committees meeting papers under the Freedom of Information Act has led to speculation about the reason that we did not publish the full Skilled Persons Report following the independent review of Royal Bank of Scotlands (RBS) treatment of small and medium-sized enterprise (SME) customers transferred to its Global Restructuring Group (GRG). It has been suggested that we chose not to publish the report because we were afraid of legal action being taken against us.
It is normal practice in regulatory decision making to consider legal risks, which we did in this case. That included advice from external Counsel. It is usual practice for material risks identified in the FCAs Governance Committees to be reflected in Board papers and discussed at Board meetings to ensure robust oversight of FCA decision making. We, as a regulator, would expect the same rigour and standards of risk management from the firms that we regulate.
We must work within the legal framework established by Parliament and the courts. Publishing the full skilled persons report would be unlawful without getting the necessary consents from all affected parties as the FCA would be acting in breach of statutory restrictions on the disclosure of confidential information if the full report is published without the consent of all parties to which its full content may relate. In addition, individuals are allowed the opportunity to see and comment on criticisms which are to be made of them in a published report (so called Maxwellisation). Likewise, we had to have regard to the possible effect of publication on our ongoing focused investigation.
We have therefore not sought consent from the individuals or groups of individuals who are identified in the Skilled Persons Report. 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. The Specialist Advisers appointed by the Treasury Committee commented that they saw considerable force in the FCAs concern that it would potentially be unfair to publish relevant findings as to management knowledge, even in summary form, prior to consulting relevant individuals.
We therefore concluded that the best way forward was to publish an extended summary of the report. Our guiding principle in drafting the summary of the report has been to balance our desire to give as much information as possible to small businesses and the wider public about the contents of the report with our obligation as a public authority to act fairly towards the potentially affected parties who have legal rights. We are firmly of the view that the approach we took was fair and balanced, a view we have had confirmed by external independent Counsel.
Background
- The Final Summary and the Interim Summary and Specialist Advisers report
- Details of RBSs complaints process and refund of complex fees for SME customers in GRG (link is external)
- 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 RBSs 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 Persons Report).
- On 1 April 2013 the Financial Conduct Authority (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).
- 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.
- Find out more information about the FCA.
