Banking update: FCA Section 166 Report on RBS’ GRG Division leaked online

The Allegations

Since the publication of the Tomlinson Report in 2013, a number of claims and allegations have been made against the Royal Bank of Scotland (“RBS”) regarding its Global Restructuring Group (“GRG”) Division. Allegations included the Bank having engineered technical loan defaults, undervaluing properties, charging excessive and unfair fees, and pushing businesses into insolvency, before selling off assets via its subsidiaries for profit.

The FCA Report

The Financial Conduct Authority (“FCA”) commissioned a report from consultants Promontory in 2014, in order to investigate RBS’ activities within its GRG further. A summary of the report was published in October 2017, and has been described as a “sanitised” version of the full Report. The full report has still not been released by the FCA or the Bank but an alleged copy was however leaked online on Monday 12 February 2018.

There has been longstanding resistance on the FCA’s part for the Report to be published, as section 166 reports are usually confidential on the basis that they are undertaken as an initial investigatory step. Whilst the FCA has agreed to publish the Report, it has not set a timescale for doing so. The Treasury Committee has confirmed that it is prepared to use its parliamentary powers to publish the report, with Nicky Morgan (Chair of the Treasury Committee) saying “if the FCA doesn’t publish this report it will have breached an order of the House of Commons and may be found in contempt of Parliament”

The publication of the full Report has been long-awaited and it is anticipated that its contents will have far-reaching ramifications for the Bank, the FCA and/or those affected by the Bank’s actions. Publishing the Report raises issues regarding the potential prejudice to the ongoing investigation against RBS and confidentiality; individuals identified within the Report, and those providing information, would need to either consent to the publication or be anonymised.

The Leaked Report

The version of the Report leaked online suggests that there was “systematic and widespread” inappropriate treatment within GRG, which was not previously mentioned within the Summary.

The leaked Report reflects a number of the widespread concerns and issues relating to the Bank’s treatment of its GRG customers, notably in relation to fees charged to small firms on their loans, internal memos relating to struggling companies and the use of suicidal analogies in reference to these same businesses.

It seems inevitable that the FCA or Parliament will be publishing the Report in full shortly, which will lead to this being scrutinised in detail. It is also hoped that this will result in a public enquiry into the actions of the Bank, and potentially also the FCA. As yet, there have been no official comments from RBS or the FCA on the widespread leaking of an alleged version of the Report online. An internal RBS memo was also leaked at the beginning of January which referred to struggling businesses as “basket cases” and suggested that customers should be allowed to “hang themselves”; the comments included in this memo will now be subject to a parliamentary debate which further reinforces the need for a public enquiry into the matter. The memo also suggested staff should “pick a number, any number” when deciding what fees to charge customers and that “missed opportunities will mean missed bonuses”.

Meanwhile, the FCA Chief Executive, Andrew Bailey, described the ongoing FCA investigation as “well advanced” suggesting perhaps that a conclusion may be drawn in the near future.

Next Steps for GRG Customers:

Ellis Jones has a highly specialised and well-established Banking and Finance Litigation Department, which has recovered in excess of £50m in redress for its clients in the last few years. We have extensive experience in making High Court claims and complaints against the Bank (whether under the Bank’s own RBS GRG Redress Scheme or via the Financial Ombudsman Service) and well-placed to advise customers on the avenues of redress available to them. If you are thinking of pursuing a claim or complaint, please be mindful that there are strict deadlines for doing so.

For more information on this matter, or if you have been transferred to GRG, please contact one of the members of our Banking and Finance Litigation Team for advice on issuing a claim or making a complaint:

William Fox Bregman, Partner of the Banking and Finance Litigation Department, on 01202 057733 or send an email enquiry

Paul Kanolik, Senior Associate, on 01202 057747 or send an email enquiry.