Bill Esterson MP: Only a judge-led inquiry can deliver the truth about what happened at RBS

Posted On: 
6th November 2017

Shadow Business and International Trade Minister Bill Esterson calls for a judge-led inquiry into RBS due to "inappropriate action taken by some at RBS and at other banks" which has he writes "caused much pain for those involved and accelerated a breakdown in trust".

Credit: 
PA

Small business customers of RBS saw their businesses ruined; their families torn apart and in some cases took their own lives. The FCA interim report into RBS/Global Restructuring Group (GRG) described widespread inappropriate treatment of SMEs. It found: staff concentrated on fees not customers; that RBS failed to ensure appropriate and robust valuations were made by staff; conflicts inherent in the “twin commercial and turnaround objectives” at RBS/GRG and highlights; a failure to support SME businesses in a manner consistent with good turnaround practice. 

92% of cases reviewed as part of the interim FCA report suffered what the FCA calls “inappropriate actions” in the handling of their case by RBS.

Who could fail to be moved by the account from Clive May, on the Victoria Derbyshire show of an RBS customer who killed himself, leaving two young daughters. His family were horrified to learn of so-called victory emails sent within RBS after their assets had been seized, all this while their loved one was floating face down in the river. 

The full section 166 FCA report has yet to be published, but has been leaked to the BBC. It refers to an intended, co-ordinated strategy to prioritise profit at the expense of customers. The full report also says that management knew about the practices at GRG or should have known. Given the important additional information in the full report, it should be published, something supported by Promontory, authors of the interim report.

Curiously, the FCA Chief Executive, Andrew Bailey, previously told MPs on the Treasury Select Committee that full reports commissioned under Section 166 of the Financial Services and Markets Act 2000 are never published. Yet in 2014, in response to an FOI request, the Information Commissioner was told that the report was going to be published anyway so didn’t need to be released under FOI. Mr Bailey really should have clearly explained to the Select Committee the reasons for the FCA’s change of heart since 2014 when he appeared recently.

Mr Bailey has previously supported calls from the Fair Banking Group for a tribunal system to be set up for SMEs who cannot afford a legal challenge to their bank. Indeed Mr Bailey admitted the backdrop is court for those pursuing consequential loss claims against RBS.

The publication of the full report would be an important step forward. The news that Police Scotland is investigating a number of complaints is also significant.

I’ve written to the Treasury Select Committee chairman, Nicky Morgan, to suggest that members of the Committee request RBS’s appearance. If RBS want to ensure a full and transparent process, then they should not have an issue giving evidence in relation to the inappropriate treatment of SMEs.

But I am calling for a judge-led inquiry to get to the bottom of what happened at RBS.For example, the FCA interim report says that only distressed businesses were put into GRG. But it doesn’t question how those businesses came to be distressed. A number of business owners have told me how lines of credit were withdrawn or personal bank accounts frozen. Such actions of course meant businesses were suddenly distressed. Similarly, the dramatically reduced valuation of assets produced distress where none had existed.

On 25 October, I wrote to the RBS CEO, Ross McEwan, about my call for a judge led inquiry to be set up. Mr McEwan’s response to his communications team was, “I have no interest in supporting another investigation after four years of review.”

Since the 2008 financial crash, caused by casino bankers in Wall Street, large swathes of individuals and organisations simply do not trust banks. The inappropriate action taken by some at RBS and at other banks has caused much pain for those involved and accelerated a breakdown in trust. And people believe it is still prevalent today. Mr McEwan’s comments are unlikely to have helped ameliorate the situation.

Justice must now be done for those who have suffered. But for the good of businesses and the UK economy, the full truth must also be established. Only a judge-led inquiry can deliver on both objectives.

Bill Esterson is a Shadow Business and International Trade Minister. He is the Labour MP for Sefton Central