FCA to Review RBS GRG Allegations

Following the publication of the government commissioned Tomlinson Report by Lawrence Tomlinson, the Financial Conduct Authority (“FCA”) have ordered a formal investigation into allegations that RBS systematically defrauded small business customers in distress. The FCA have instructed Consultancy Promontory Financial Group and accountancy firm Mazars to look into claims made in Lawrence Tomlinson’s report in late November 2013. The report is due to be published in 2015 and if the findings reveal issues which come within the FCA’s remit, the FCA may consider furher regulatory measures.

FCA Order s.166 Review into RBS’s GRG division

On 25 November 2013, Business Entrepreneur Dr Lawrence Tomlinson published an explosive report which examined the treatment of borrowers by the Royal Bank of Scotland’s turnaround division Global Restructuring Group (“GRG”) and concluded that RBS forced viable businesses into financial trouble so it could profit from their distress by squeezing them for exorbitant fees and charges. Tomlison found that once the business had collapsed, RBS’s property division, West Register purchased its devalued assets and the sold the assets off to make a profit.

Following the publication of the report, the FCA announced that they would be investigating claims which arose from the Tomlinson Report. Today, the FCA have announced that they would be using their powers under s.166 FSMA to commission a Skilled Person Review; the report will examine RBS’s treatment of business customers in financial difficulty and consider allegations of poor practice set out in the report by Dr Lawrence Tomlinson and referenced in Sir Andrew Large’s report RBS Independent Lending Review.

Sir Andrew Large had previously commented in his report:

“RBS needs to address the concerns that have been raised by some customers and external stakeholders about its treatment of SMEs in financial distress and minimise the perceived conflict of interest within GRG. This would be best achieved through a forensic inquiry to substantiate or refute serious accusations that have been made.”

FCA Report to Examine Treatment of RBS Customers in GRG

The FCA announced on their website that:

“The first stage of the review will consider RBS’ treatment of a sample of customers referred to its Global Restructuring Group. This will include some cases where customers have already raised concerns with Dr Tomlinson, the Department of Business, Innovation and Skills or the FCA.

The review will also consider whether any poor practices identified are widespread and systematic. If this is the case, the second stage of the review will identify the root cause of these issues and make recommendations to address any shortcomings identified.”

In press interviews since the publication of the Tomlinson Report, Dr Lawrence Tomlinson surmised that the FCA will be “shocked by the treatment of businesses and the lives that have been ruined.”

Lawrence Tomlinson’s report can be read here: Tomlinson Report (PDF) & Tomlinson Report (Text)

Sir Andrew Large’s report can be read here: RBS Independent Lending Review Report (PDF) & RBS Independent Lending Review Report (Text)