Today (31.07.18) the FCA announced that it does not have the regulatory powers to take disciplinary action against RBS or the individuals involved in the GRG scandal by imposing financial penalties or further regulatory action.
Crucially, the FCA announced “The fact that GRG was largely outside the jurisdiction of the FCA is important. There are no enforceable regulatory rules, for example ‘conduct of business’ rules, against which to assess GRG’s treatment of SME customers. The relationship between RBS and its customers was principally governed by the terms and conditions of the commercial contract between them. The steps RBS could take under the law, while seeming unfair to many customers, were governed by the terms of the contract and not regulatory rules. The largely unregulated nature of GRGs business also means that, in this case, we do not have the power to take disciplinary action, such as imposing financial penalties on RBS or individuals”.
At the APPG we are extremely disappointed, but largely unsurprised, by this announcement. It is simply not good enough from a regulatory perspective to say that the powers to hold individuals to account simply do not exist.
Kevin Hollinrake MP, Co-Chair of the APPG, said: “The FCA should release all findings and evidence they have obtained in their investigation of RBS GRG, unredacted so that the individuals who are responsible for this misconduct are in the public domain. The FCA have an obligation to release this information so that politicians can have a say in whether it is truly the case that no further actions can be applied. As lawmakers we have an obligation to the public to ensure that those who are responsible are accountable and not untouchable, as indeed is the case now where the individuals responsible are protected by the regulatory inadequacy of our current system”.
He also stated: “The FCA should release all of their findings so that the untouchable senior managers at RBS GRG, many who remain working in the banking sector, are held to account. The public, the press and indeed the financial sector themselves have a right to know who is responsible for this misconduct”.
What has to be made absolutely clear is that this is not the FCA giving RBS an innocent verdict in relation to their GRG unit. It is clear that the FCA do not have the powers to adequately investigate and discipline instances of misconduct to a degree which gives victims any confidence.
