Regulation  

Tyrie disappointed by RBS review delay

Tyrie disappointed by RBS review delay

The Financial Conduct Authority has delayed publication of its report into the Royal Bank of Scotland’s Global Restructuring Group until next year.

In December 2013, the regulator announced it was undertaking a section 166 review of allegations contained in a report published by Lawrence Tomlinson, entrepreneur-in-residence at the Department for Business Innovation and Skills.

The probe was ordered following claims that the bank had forced firms out of business to benefit its own in-house property arm.

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The report, unveiled at the same time as an SME lending report commissioned by RBS itself, claimed the bank engineered defaults and pushed otherwise healthy businesses into its Global Restructuring Group, damaging their credit status and accelerating their decline.

The section 166 skilled persons review sees an independent figure investigate the claims in an agreed timescale, with further regulatory measures being considered if necessary.

A month later, the FCA appointed Promontory Financial Group and Mazars to write the report on RBS’ treatment of business customers in financial difficulty.

At that stage, the regulator expected to review outcomes by the end of 2015, but an update published late yesterday (17 December) explained “the work is ongoing and good progress has been made, and all parties remain keen to complete this complex review quickly”, adding that an announcement will be made as soon as possible in 2016.

Andrew Tyrie, chairman of the Treasury select committee, commented those affected will find this disappointing.

“The longer the delay, the longer that small firms – possibly forced out of business by GRG – may have to wait to receive compensation. This is because RBS will only take a decision on a possible redress scheme after the regulators’ report is published.

“The committee will want to examine the report carefully, when it finally appears.”

The delayed publication of the RBS review comes after only last month Parliament and the public were finally handed an official report on what went wrong at Halifax Bank of Scotland.

This was the second worst failure in British banking history, after RBS, and with impairments in the loan book – as a proportion of the balance sheet – that were twice as bad.

The report concluded ultimate responsibility for the demise of Hbos lies with the bank’s board, but the FSA was asleep at the wheel, and even the start of the financial crisis failed to wake them.

peter.walker@ft.com