The head of Britain's financial watchdog has told Royal Bank of Scotland to speed up its handling of compensation claims related to its treatment of struggling businesses during the financial crisis.
RBS’s Global Restructuring Group (GRG) has been accused by customers of driving them to bankruptcy in order to pick up their assets on the cheap. State-owned RBS has set aside £400 million to cover the bill for claims against it.
Andrew Bailey, chief executive of Britain's Financial Conduct Authority (FCA), told a parliamentary committee on Tuesday that he had asked RBS CEO Ross McEwan "to get his act together" on claims processing.
In a letter to the Treasury Select Committee, McEwan said: "We deeply regret the mistakes we have made in the past".
“We fully accept that that we did not, in all cases, fully comply with our own policies or always meet the standards of service that we set ourselves,” the letter said.
Committee chair Nicky Morgan emphasised the toll on many GRG customers who had lost their business, their homes and suffered mental health issues and family breakdown.
“I do believe we are now in the process of getting money back to the victims,” FCA Chairman John Griffith-Jones told the lawmakers.
“We have to establish facts before we get into the blame process,” Griffith-Jones said.
The FCA last week published a detailed summary of consultant Promontory’s report into GRG but it has refused to publish the report in full.
The summary outlined numerous failings but RBS said last week the most serious allegations against it had not been upheld.
“What matters at this stage is that those unfairly treated by GRG receive the redress they’re due,” said Mike Cherry, national chairman of the Federation of Small Businesses.
RBS had to be bailed out by the British taxpayer during the financial crisis and remains 70 per cent owned by the state.
Bailey said he believed RBS should have reacted differently to the conclusions of the report.
“The report is strongly critical of RBS, and I think it is frankly unfortunate that RBS has not in a sense accepted that more readily,” he told the committee.
Bailey was repeatedly asked by Morgan about why the watchdog has taken so long to report back on GRG.
Bailey said this was partly due to there being “no meeting of minds” between RBS and Promontory, the external consultant hired by the watchdog to write the report. This meant that the FCA had to spend time checking the report, Bailey said.
-Reuters
