Statement regarding the leaked FCA S166 report on RBS’s Global Restructuring group. Importantly, the leak corroborated the Tomlinson report, Buzzfeed and the BBC, outlining that GRG targeted profitable businesses for destruction. The APPG calls for the full release of the report. 

Statement from the All Party Parliamentary Group on Fair Business Banking and Finance 01 September 2017

With yet another scandal hitting taxpayer-owned RBS, this begs the question: when do we say enough is enough? The recent leaking of the S166 report into the activities of RBS GRG has confirmed that less than 10% of businesses that entered GRG returned to mainstream banking; this reaffirms what has been in the public domain for over four years. The Tomlinson report, the Buzzfeed/BBC expose on the ‘dash for cash’ and now the leaked S166 report for the FCA all unequivocally point to the needless and, critically, targeted destruction of UK businesses in order to bolster the bank’s balance sheet. And this is not just the destruction of businesses: it is families, jobs, supply chains all devastated. It is unacceptable that we have a system that allows entrepreneurs—and the people who depend on them for employment—to be treated with contempt and denied any real prospects of defending themselves against the financial firepower of a multinational organisation with limitless resource.

APPG vice-chair Sammy Wilson MP said, “ I have dealt with a number of businesses who have been victims of the financial abuse imposed on them by the Ulster Bank in Northern Ireland. They believe that their businesses have been put in jeopardy in order to meet the cash targets set by RBS as they have forced sales of assets or taken control of assets which were cash earners for the businesses. It is wrong that a bank, which was bailed out by the tax payer, should then be responsible for throwing so many of those tax payers into bankruptcy or onto the dole. Instead of holding RBS to account, successive Governments have given the bank the benefit of the doubt and even when the evidence of malpractice has been staring successive chancellors in the face, action has not been taken, with the awaited publication of the S166 report often cited as the reason for inaction .”

Thus far, the reaction to this scandal over the years has been woefully inadequate. The ‘voluntary’ redress scheme set up by RBS doesn’t even scratch the surface of the true scale of the destruction of over ten thousand businesses, and the bank, quite simply, does not have the moral authority or trust of the public—or Parliament—to be its own judge, jury and executioner in this matter. It is misleading the press and public in its statements about the involvement of the FCA. The scheme set up by RBS is not mandated or sanctioned by the FCA; it is of the Banks’ own making, and the sum of £400m it has set aside is teetering on the farcical. Half -hearted apologies and full page ads in papers do not address the problem, and our businesses and entrepreneurs deserve better from our institutions, regulators and government. As it stands, the system is failing them.

APPG co-chair Clive Lewis MP said, “The behaviour of the RBS GRG over the past decade may be the worst ever case of malpractice in the history of the British finance industry. It constitutes theft and fraud on a grand scale. Ross McEwan the CEO of RBS has been in post for 4 years and has utterly failed to deal with this; he should be sacked immediately and replaced by someone with the ability and determination to sort it out.

It is now absolutely imperative that the FCA release the s166 report into the RBS GRG immediately. No more delays, no more excuses. Any other course of action reduces the FCA’s already tattered credibility and further undermines the City of London’s international reputation.

I can only imagine the human cost to those whose lives have been so cruelly ruined by these vultures but the victims must now have the satisfaction of genuine financial redress and of seeing justice done.” The public, Parliament and, crucially, those whose lives have been destroyed by GRG have lost patience. Whilst this sorry saga has been dragging along, RBS has been spending hundreds of millions of pounds of taxpayer money in court defending the indefensible, with obscene amounts of money being spent on litigation that eventually settles with a gag order so that precedent unfavourable to the bank— but possibly a saviour for businesses—does not get set.

The systematic destruction of businesses also begs the question—as it does with HBOS Reading—as to whether there are suitable safeguards within the insolvency profession to act as a check for poor and, indeed, criminal behaviour. It is time that the Government, FCA and Parliament step up to the plate to ensure that businesses get fair treatment and access to affordable justice. This has been a matter left too long to drift in the regulatory and legislative wilderness, and the consequences have been catastrophic not only to individual lives, but to confidence in our entire financial system. As we enter a period of uncertainty over Brexit we must do everything in our powers to support our SMEs—the life blood of our economy.

“This latest information appears to show the scale of the truly shocking abuse of commercial power by a mainstream lender” said APPG co-chair Lord Cromwell ” The parliamentary group seeks to bring together the financial institutions and their customers in a balanced way to support a major industry and those it enables through its services to grow and create prosperity” he added. “It is now well beyond time that the relevant S166 reports are published in full – there is proven need for a far more determined and proactive approach to resolving and preventing such appalling behaviour, and we will be approaching the FCA and Government to discuss how this can be achieved.”

The APPG is calling for the following:

–The Promontory S166 report—along with the initial letter of instruction and scope of engagement— needs to be published as a matter of urgency. As a taxpayer-owned institution, RBS must be open to public scrutiny, and the statements from the FCA and RBS made in November 2016 must be scrutinised alongside this report.

–An independent system for compensation must be set up to deal with the thousands of businesses that have been affected by the wholesale asset stripping of small businesses by the state owned lender. An in-house compensation process that allows an institution to be judge, jury and executioner is not acceptable, and does not have the relevant authority or confidence.

–Derek Sach and Chris Sullivan categorically told the TSC in 27 separate statements that GRG was not a profit centre. This has proven to be incorrect, and they, along with Ross McEwan, must be called back in front of the TSC in light of all the new evidence that has come out to account for the treatment of businesses in the wake of the financial crisis.