An influential group of MPs has branded the findings of a report into the Royal Bank of Scotland’s mistreatment of small businesses “disgraceful” after wielding parliamentary privilege to publish the controversial dossier.
The Treasury Select Committee (TSC) said there was “overwhelming public interest” in shifting the Global Restructuring Group (GRG) report into the public domain after it was widely leaked online and through social media.
The move came after Andrew Bailey, head of the Financial Conduct Authority (FCA), was ordered by the TSC earlier this month to publish the document on GRG, the banking giant’s much-criticised restructuring arm.
However, he said the release “proved impossible” for legal reasons.
RBS has been dogged by allegations that GRG intentionally pushed small businesses towards failure in the hope of picking up their assets on the cheap.
In a statement, TSC chair Nicky Morgan said: “The findings in the report are disgraceful.
“The overarching priority at all levels of GRG was not the health and strength of customers, but the generation of income for RBS, through made-up fees, high interest rates, and the acquisition of equity and property.
“The committee has not taken the decision to publish lightly.
“Normally, reports prepared under section 166 are confidential, but there is overwhelming public interest in bringing transparency to what happened at GRG, given the earlier leak of the report, and in ensuring that everyone can see, and know that they are seeing, an authentic and verified copy of Promontory’s original report.”
The report by Promontory Financial Group found that there was “widespread inappropriate treatment of customers” inside the GRG unit.
However, it said there was no evidence that “defaults were engineered to transfer businesses to GRG simply to generate revenue for RBS through fees”.
It said the failings were not “one-off errors of staff” at an institution “under significant pressure”, but were sparked by GRG governance standards falling short.
The release follows the publication of previously undisclosed memos last month showing GRG staff being encouraged to apply pressure and extract money from customers.
One memo, entitled Just Hit Budget! – which was written in 2009 – talks of applying particularly high interest rates, which could then be reduced if customers signed over a stake in their business or property, and detailed how staff sometimes “need to let customers hang themselves”.
A spokesman for RBS said the report made for “very difficult reading” and it was “deeply sorry” that customers did not get the experience they should have done.
He added: “Although the most serious allegation – that we deliberately targeted otherwise viable businesses in order to distress and asset-strip them for the bank’s profit – has been shown to be without foundation, we know that the bank got a lot wrong in how it treated some customers in GRG during the financial crisis.”
The lender has moved to head off criticism by launching a complaints process spearheaded by retired High Court judge Sir William Blackburne and offering to refund complex fees.
The bank added: “The culture, structure and way RBS operates today have all changed fundamentally since the period under review and we have made significant changes to deal with the issues of the past, including how we treat customers in financial distress.”
The review has become the subject of a long-running tussle between the TSC and Britain’s financial watchdog as calls for its release gathered steam.
The FCA was heavily criticised for “completely” losing control of the review after seeing it leaked online and on social media before being made public.
Speaking to the TSC on Tuesday, the incoming chairman of the FCA said the handling of the RBS report was a question for the board under its current chairman, but he would assess how cases are treated in the future
Charles Randell said: “It must be my first priority when I arrive at the FCA to conduct my own assessment of, I think, not just the RBS GRG report, but the background to all of the cases where there has been, as I say, this very obvious tension between public expectations and the expectations of (Treasury Select) Committee and what the FCA has felt able to deliver.”
Shares in RBS were 0.4% lower in afternoon trading on the London Stock Exchange.