British Financial Watchdog Allows Scrutiny of Confidential RBS Report

On Tuesday, MPs said that the Financial Conduct Authority of Britain has consented to allow a classified report on the treatment of the Royal Bank of Scotland on struggling companies to be examined by a barrister.

In a letter to MPs, the chief executive of the FCA, Andrew Bailey, agreed to permit a barrister to examine a summary of the report against its entire contents, which the regulatory agency states was never meant to be publicised.

It has declined to publish the report, irritating MPs on the Treasury Select Committee of the Parliament, who announced that they had appointed barrister Andrew Green to scrutinise the summary last week.

The report reviews the conduct of the Global Restructuring Group, the small business restructuring unit of RBS, which managed 12,000 troubled companies between 2007 and 2012, a period surrounding the financial crisis. Some customers have accused it of forcing them into bankruptcy so it could pick up cheap assets.

State-backed RBS has admitted some malpractice over its treatment of small businesses but has stated that there was no evidence that it drove companies into bankruptcy. However, the bank has set aside 400 million pounds to reimburse fees to those customers who claim that they were mistreated.

The said report was leaked to the BBC, which stated that it showed that only 10% of the companies that were placed in the recovery group emerged intact and returned to the main RBS bank. The unit has since been closed, although a similar unit is still currently operating.

The chair of the Treasury Select Committee, Nicky Morgan, said that its legal advisers will now begin their work and report to the committee before Andrew Bailey appears before them in person at the end of October.

“If the advisers’ report does not provide the committee with the assurance it needs, it will decide whether any further steps are required,” stated Morgan in a statement, adding the review of the committee should not prevent the FCA from publishing its summary as soon as possible.

Last week, the FCA stated that it has already requested an independent external counsel to verify that its summary is a fair and balanced account of the findings of the full report.

The entire report is based on a so-called skilled person report that was conducted by Promontory consultancy in 2014. The FCA has stated that such reports were compiled on the understanding that they would not be published.

However, Morgan has stated that the GRG report is an “exceptional case,” since it has already been leaked. Morgan will examine Bailey in public in the coming weeks when he appears before her committee.