FOR many years, there has been a mood in the country for revenge against bankers who have abused their positions of trust. People look to Iceland, where bankers were imprisoned, and they approve. There is an element of revenge in this, about which we should be cautious, but justice is another matter and is always to be sought. Thus, it is understandable that, when the Financial Conduct Authority (FCA) announced yesterday that it would not be taking action against Royal Bank of Scotland for its infamous treatment of small businesses, fury erupted.

The SME (small or medium enterprises) Alliance condemned the reasons for non-action as a “whitewash” and the regulator’s conclusions as “bizarre and cynical”. The FCA, for its part, says it’s not so much a case of won’t take action as can’t. Independent legal advice, it said, had found that activities of the bank’s now notorious Global Restructuring Group (GRG) were not within its remit because the GRG was technically unregulated. The FCA claimed it had explored all options, but its sigh of relief was clearly audible across the country.

Even if its case was watertight, the impression given was of bankers operating above the law and regulators operating under it. Furthermore, the FCA’s appearance of acknowledging its light touch with a heavy heart was belied by its behaviour hitherto, not least in trying to redact the review it was directed to draw up about the scandal. The man or woman in the street would also have been bewildered by the review’s claim to have found no evidence of a “lack of integrity” among senior bank officials, while also acknowledging “widespread and systemic” inappropriate treatment of customers in a culture that “fell well short” of expected standards. The FCA’s definition of integrity must be infinitely elastic.

Here was a bank group whose internal memos spoke of giving customers enough rope to “hang themselves”, of then slyly working to gain their trust and getting them to agree “chunky fees”, while making them feel grateful. They allegedly intimidated customers with threats of bankruptcy. They even cherry-picked items from a shop that went under.

Clearly, they thought they were untouchable but, in the words of Kevin Hollinrake, co-chair of the All-Party Parliamentary Group on Fair Business Banking, they must be made fully accountable. Under the current legislative framework, there’s nothing to stop the same disgraceful behaviour occurring again.

Meanwhile, all the regulator’s pronouncement has done is to highlight the inadequacy of the regulatory system as regards commercial lending to SMEs. This needs reforming immediately, with additional powers available to the FCA, so that there can be no more excuses in future. A restive public has had enough of these.