The FCA has published an update on its investigation into RBS’s treatment of small and medium-sized enterprise (SME) customers transferred to its Global Restructuring Group (GRG).
The FCA commissioned an independent review in 2014 and found that RBS’s GRG unit had systematically mistreated customers. However, the FCA has now confirmed that it has no power to take action against RBS because commercial lending is largely unregulated in the UK. The relationship between RBS and its customers was principally governed by the terms and conditions of the commercial contract between them.
In addition, the FCA commented that it found no evidence of dishonesty or lack of integrity, specifically, that senior management sought to treat customers unfairly.
The FCA acknowledged that many GRG customers will be frustrated by its decision and stressed that the fact that it cannot take action does not condone the behaviour of RBS. The FCA expects high standards from regulated firms and RBS fell well short in its treatment of GRG customers.
The FCA’s decision not to take any further action may have differed if the Senior Managers Regime (SMR) was in place at the time of RBS’s mistreatment of the SME customers concerned. However, the SMR rules cannot be applied retrospectively.
In its statement, the FCA stressed that although commercial lending to SMEs is unregulated, the SMR means that it is now able to hold senior management of banks to account for the way that they treat their SME customers.