Andrew Bailey, chief executive of the FCA, said: "Our investigation has found that GRG clearly fell short of the high standards its clients expected but it was largely unregulated and so our powers to take action in such circumstances, even where the mistreatment of customers has been identified and accepted, are very limited.
"GRG has been highly damaging for those customers impacted and more widely for the reputation of the banking industry. Combined with other issues that have impacted SME’s it is important for all who work in this sector to regain the public’s trust."
The regulator’s report went on to note how the regulatory situation had changed since the case against RBS hit the headlines.
In March 2016 the Seniors Managers and Certification Regime was rolled out to banks. The regulator stated if the SM&CR had been in force during the review period, it would have had a clearer understanding from the start of which individuals were responsible to RBS and GRG activities.
The aim of the SM&CR is to reduce harm to consumers and strengthen market integrity by creating a system that enables firms and regulators to hold people to account.
As part of this, the regime defines the responsibilities and accountability of senior managers in authorised firms in a way which applies to all activities they conduct — whether they are regulated activities or not.
On top of this, the FCA would have had jurisdiction, if there was sufficient evidence, to take action against RBS senior management for breaches of the conduct rules despite GRG’s activities being largely unregulated.
The regulator also pointed out that there has been an extension of the scope of the Financial Ombudsman Service in terms of both increasing the coverage to include many more small to medium enterprises and an increase in the amount that can be awarded in such cases by the Fos.
The changes on SME coverage mean about 210,000 additional firms have access to the Fos process.
Mr Bailey said these were "very important" changes and stressed the FCA will continue to closely monitor the sector and the complaints process to ensure that are put right.
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