Court papers published this week indicate that the government had “day-to-day” involvement and “strategic” control over RBS’ GRG division through the Asset Protection Agency. These allegations, which date back to late 2009, are extremely serious and clearly require an urgent a thorough investigation. This needs to determine the true extent of the relationship between the Treasury and RBS in their mistreatment of business customers in the aftermath of the financial crisis.
These allegations come after years of campaigning by many stakeholders to uncover the true nature of the abuse to small businesses, which are not confined to RBS.
Thousands of British businesses suffered at the hands of their own banks during the fall out of the financial crisis. Many victims have still not been compensated and those responsible for their mistreatment have yet to be identified and held to account. Whilst it was understood that the Asset Protection Scheme had a strategic role in prioritising the return of taxpayers’ money used to bail banks out, evidence that the APA may have been directly or indirectly responsible for decisions on individual cases that ripped businesses apart and devastated lives and livelihoods is hugely concerning.
This also raises further doubts about the FCA S166 investigation into RBS GRG. The APPG has previously protested that Phase 2, which would have identified the root causes and external influences of the systematic abuse of business customers, was taken back in-house. This clearly raises key questions about the motivations and independence of the regulator and its willingness to identify those responsible and hold them to account, whatever their role or status.
It is now apparent that executive pay at the APA and RBS GRG was directly linked to APA targets. It seems extraordinary that civil servants at the Treasury were being paid to withdraw finance from businesses, particularly at a time when the apparent focus was to free up lending to SMEs.
It is deeply concerning that the FCA have taken this part of the investigation ‘in-house’ and these revelations only serve to heighten these concerns. Serious questions must be answered. A representative from the FSA was seconded to the Asset Protection Agency to set up the system and then the FCA was left to conduct the investigation into RBS GRG.
Kevin Hollinrake MP, Co-Chair of the APPG on Fair Business Banking, said: “These are very serious allegations and raise important questions about the relationship between the government and the banks during and after the financial crisis. These allegations must be robustly investigated and anyone found guilty of wrongdoing should be held to account. It goes without saying that any victims should be fully compensated. If there is any substance to these claims it will only add to the calls for a full public inquiry into this and other UK banking scandals”.