Shares in Royal Bank of Scotland Group (LON:RBS) have advanced in London in today’s session as the Financial Conduct Authority (FCA) said that it will take no action against the company in relation to its controversial Global Restructuring Group (GRG) which allegedly forced small company clients out of business. The move came after the bailed-out lender signalled last week that it will close its scheme to compensate small businesses hurt by its turnaround division to new complaints.
As of 14:03 BST, RBS’ share price had added 1.54 percent to 257.40p. The stock is outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 1.03 percent higher at 7,779.94 points.
FCA to take no action against RBS
The FCA announced in a statement today that no action will be taken against RBS and its senior managers in relation to the company’s GRG unit, explaining that the business was ‘largely unregulated’.
“The FCA’s powers to take action in such circumstances […] are very limited,” the watchdog’s chief executive Andrew Bailey said in the statement, adding that the fact that the FCA “can’t take action in no way condones the behaviour of RBS”.
Today’s statement follows the watchdog’s review into the division which found no evidence that the bailed-out lender “artificially distressed and transferred otherwise viable SME businesses to GRG to profit from their restructuring or insolvency,” but identified “a number of circumstances where it appeared GRG had not treated customers fairly or reasonably”.
‘Disappointing and bewildering’ news
“I appreciate that many GRG customers will be frustrated by this decision but we have explored all the options available to us before arriving at this conclusion,” Bailey continued. The BBC quoted Nicky Morgan, chair of parliament's Treasury Committee, as saying that for those caught up in GRG’s actions the news that the FCA is unable to act would be ‘disappointing and bewildering’.
Reuters meanwhile quoted RBS’ Chairman Howard Davies as commenting that the lender’s board had welcomed the FCA’s decision, and continued to focus on ensuring past mistakes cannot be repeated.
RBS is scheduled to update investors on its second-quarter performance on Friday.