The Financial Conduct Authority has defended its decision not to publish full details of its investigation into Royal Bank of Scotland’s treatment of small and medium-sized business, in a move unlikely to end continuing calls for full publication.
The move was made as Royal Bank chief executive Ross McEwan admitted that the bank is unlikely to reach a settlement with the US Department of Justice (DoJ) before the end of this year, meaning its plan to return to profitability next year could be knocked off course.
The FCA said it was “normal practice” to consider legal risks when making decisions.
“It has been suggested that we chose not to publish the report because we were afraid of legal action being taken against us,” it said in a statement.
The report into the conduct of the lender’s Global Restructuring Group (GRG) was restricted to an extended summary, which led to calls for full details.
According to the summary, “instances of inappropriate treatment” by the Bank were deemed to have impacted 92 per cent of business which were part of the review.
The FCA, which is currently investigating matters which arose in the report, has now issued a statement saying full publication would have been unlawful, without it meeting certain conditions.
“The FCA would be acting in breach of statutory restrictions on the disclosure of confidential information if the full report is published without the consent of all parties to which its full content may relate,” it said.
Obtaining such permission would “be a complex and lengthy process” said the FCA. “And, where consents were not forthcoming, would likely result in only a heavily redacted version of the Skilled Persons’ Report being publishable.”
The FCA said that specialist advisers appointed by the Treasury Committee commented they saw “considerable force” in the FCA’s concern.
“We are firmly of the view that the approach we took was fair and balanced, a view we have had confirmed by external independent Counsel,” it concluded.
Regarding the settlement with the DoJ, Mr McEwan had previously said that he expected RBS to make a profit in 2018 - its first since being bailed out by the UK Government in 2008 - although that projection was contingent on the bank reaching a deal with the DoJ over its historical mis-selling of toxic mortgage-backed securities.
It is estimated that RBS will have to pay the US law enforcement agency in the region of £9 billion, around two thirds of which it has already set aside.
However, in an interview with Bloomberg TV Mr McEwan said that “there are diminishing chances we settle in the year”.
If that was the case the bank would have to make further provision in 2018/19, with Joe Dickerson, an analyst at investment banking group Jefferies, predicting that that would wipe out most of the £3bn profit RBS was expecting to make next year.
RBS declined to comment.
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