As Larry Elliott has reported in the Guardian this morning:
The Financial Conduct Authority is usually described as the City's watchdog. In the case of the disgraceful treatment of small businesses by the Royal Bank of Scotland's global restructuring group the FCA has proved to be a paper tiger.
As he notes:
Businesses were badly and systematically let down by GRG, a unit that was specifically created by RBS to help customers cope with the tough business conditions created by the financial crisis of a decade ago. Precious little tender loving care was extended to those in trouble. Instead, as has all too often proved to be the case in the modern City, the interests of the people running GRG were put before those of customers.
So bad has been the abuse that the FCA were asked to investigate. And as Larry notes:
Unfortunately, after due deliberation, its message to those who mistakenly expected RBS to help during the worst recession since the 1930s was simple: we feel your pain but can do nothing about it. The FCA says it has been stymied because commercial lending is unregulated in the UK, and that it was unlikely to make action against individual members of the RBS senior management team stick either.
So bankers can screw small and medium-sized business entities with impunity then. As I have heard some say, WTF?
What we have in the UK is far too much regulation made by those who are regulated and enforced by those recruited from, and who have intent to return to, the ranks of those who might be found to have done wrong. This is a perfect example of that.
Why has this happened? Because some time ago most politicians gave up the hard work of thinking about how they would enforce their wishes to protect those who have voted them to fulfil this objective, and instead passed over that task to private interests. It's time to take that responsibility back.
Is it too much to ask that politicians think for themselves once more, and engage those who can to0 act on their behalf?
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If you give a man a gun, he’ll rob a bank.
If you give a man a bank, he’ll rob the world!
I wonder if you noticed this press release?
http://www.pressreleasepoint.com/closure-investigation-grant-thornton-uks-audits-globo-plc
This might be a white wash.
Little history…
Globo asked the previous auditors (BDO) to resign. The resignation letter can be seen at companies house. (17 Feb 2014). The reason on the Sect 519 says,
“inability to agree a mutually acceptable audit scope in relation to our involvement of component auditors, needed to obtain sufficient appropriate audit evidence on which to base audit opinion on the group financial statements.”
My understanding is that GTUK never asked the previous auditor what this meant. This is negligent. GTUK signed off accounts after this date.
Further and this puts FCA in a very bad light. It is my understanding that BDO were so concerned at the time (around) Feb 2014 that they wrote a letter to FCA, as their regulators, to explain the situation in more detail.
I don’t know what this letter said but it is unclear what the FCA did with this letter if anything but surely as a minimum they should have discussed with BDO and GTUK.
Do you know if a freedom of information request could get it published?
Basically it looks like FCA has dropped the ball here.
(sorry for going anon on this)
Why not FoI it?
It is extraordinary that in Britain regulation continually fails; typically it fails catastrophically. Then precisely nothing changes. In the financial sector the hapless, failed FSA was replaced by the hapless FCA. The FCA seems to have required to carry out a “forensic” investigation, simply to discover that commercial banking in Britain is unregulated, and it has no effective power to intervene, or um; regulate. You might have thought they knew; you might have thought the politicians would have ensured they had sufficient powers: they had the dire warning of the failed FSA as the warning.
What is the point of the FCA? There is none; and now you know where the consumer stands in this industry with regard to regulatory safeguards; precisely nowhere.
And yet the siren voices of Conservative free-enterprise (so-called), would have you believe we live in an over-regulated, ‘nanny-state’ country. Clearly we are not making the environment easy enough for smooth talking chancers to rip the consumer off. They don’t want much: your head on a plate will do.
Was the failure of the politicians to ensure the FCA had the necessary powers to protect commercial banking consumers an accident? Or was it deliberate policy? How could regulation fail again, so badly, so soon?
Yes. We live in a country where our political class gave power away. Since, people very rarely give power away, one has to assume it was on the basis of self-interest (or for some ideology?). And, of course, they had the perfect cover story with the ‘invisible hand’. Aided and abetted by the fourth estate, of course. Let’s not forget their hand in this almighty mess.
This act of giving power away to an elite business/financial class still upsets me when I think of what New Labour did, and didn’t do during their 17 year reign.
I remember hearing (I think it was File on 4) some time ago about the behaviour of GRG staff as part of this scandal, and how they’d conspired to cheat their clients out of their own companies. I think the police were trying to charge one particularly nasty piece of work within GRG on several counts of fraud.
I also remember hearing a couple who had an SME and were one of the victims of the GRG describe their treatment by the GRG. And now this. It’s like listening to the endless lunacy of Brexit; just when you think the Brexit morons can’t come up with anything more ludicrous, they do. Just when you think there are no more examples of useless financial regulation to be revealed, there’s this. As you’ve all said, what is the point of the FCA?
To go back to the RBS issue, prior to a shareholders’ meeting I wrote to the Chair of RBS to ask in whose interests the bank is being run.
It’s clearly not the UK taxpayer who paid approx twice the long-standing current share value to bail it out after the 2008 GFC. Likewise, it’s not the company’s shareholders who have lost on the capital value of their investments, have had no dividends in a decade and have scant prospect of getting any in the near future given the seemingly endless conveyor belt of massive settlements for its reckless and illegal operations around the world.
It’s clearly not in the interests of most of the employees who continue to be paid-off in huge numbers as the bank shrinks its operations. Nor is it in the interests of the customers, given an ongoing programme of branch closures which hit rural areas particularly hard. One instance among hundreds is the threatened closure of its branch in Castlebay on the island of Barra. Barra has a population of approx 1200 and a huge tourist throughput, so its economy has a significant cash component. The RBS branch there is the only bank on the island, so a closure would have a massive impact on the island’s people and businesses. RBS, in its typical caring way, advised account holders in Barra where their nearest branches and ATM would be if the closure goes ahead. They were all on other Hebridean islands (and getting there involves lengthy ferry/air/public transport journeys) or on the mainland (involving a 5-hour ferry trip or an expensive flight which has to be booked weeks ahead as the plane only carries 15 passengers). So much for Customer Care. Should the bank be renamed The Royal Bank of Almost Nowhere?
I could only conclude that RBS has become an oligarchy run in the interests of upper management, who have continued to receive massive bonus payments year on year in spite of the losses and reputational damage. That reputational damage also extends by association to the nation of Scotland, which formerly had a world-wide national reputation for thrift and canny handling of finances, but that has been tainted by the reckless behavior of RBS (and HBOS).
Needless to say there was no response from the Chairman, but I did get one from an official offering platitudes and explanations which dodged the issues raised. Given the demonstrable mismanagement, incompetence and often illegal practices both before and after the 2008 GFC, it’s astonishing that nobody went to prison. Now the failure of FCA to address the malpractices of RBS’s GRG (how about forging customer signatures?) makes it clear that anything goes in the UK’s financial governance.
Sorry for the rant, but I feel a bit better now!
RBS should have always been nationalised, and made into the regional bank for reconstruction this country needs
But it wasn’t
Labour is partly to blame for that with its paranoia about seeing to use the N word in 2008
Big Bang, 1986 doomed the independence of the Scottish banks from the baleful influence of the City of London. Where are they now? London (the location of the registered office would make a fascinating study in insignificance).
I’m afraid it is too much to ask.
In the years leading up to the 2008 crash RBS was already using its SLS division, later GRG, to force small businesses with large borrowing into forced decline where control was exercised by the bankers for their benefit and those of the bank.
In one such case with which I was involved (not as an owner) they forced a bank appointed chairman on the company whose property assets were later sold at a discount. The bank was repaid and the shareholders lost everything. This may not sound unusual if the company was insolvent (it wasn’t) until you factor in who the asset purchaser was and the fact that the assets were later sold at a profit.
I am convinced that this was a deliberate bank policy encouraged by the then senior management. The FCA decision is a green flag for banks to continue this abuse of privately owned companies.