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| City watchdog to take no action over RBS mistreatment of customers - live | City watchdog to take no action over RBS mistreatment of customers - live |
| (about 1 hour later) | |
| Another call for the Financial Conduct Authority to publish its full report on the Royal Bank of Scotland/GRG scandal, this time from the Federation of Small Businesses. Its chairman Mike Cherry said: | |
| There’s nothing in the current legislative framework to stop another GRG-type scenario. As long as commercial lending remains unregulated, small firms will be vulnerable. The hope is that – as the FCA claims – the new Senior Managers Regime will lead to a more responsible lending climate in future. | |
| Too often, the regulator doesn’t recognise that small business owners have far more in common with consumers than big corporations. Where you have personal guarantees for example – small business owners putting personal assets on the line to secure a loan – then surely that should be deemed consumer, regulated lending. | |
| The FCA’s decision follows the announcement that RBS is shutting its redress scheme for GRG customers in the coming months. If you have 16,000 customers who are eligible to use the scheme and only 1,230 have complained, common sense dictates that the scheme needs to stay open for a good while yet, particularly as the bank is still receiving six GRG complaints a week. | |
| The FCA needs to publish its full findings as swiftly as possible. The only way to restore trust between small firms and the big banks is to show that the wrongs of the past are being put right, and real change is happening to prevent unfair treatment in the future. | |
| The All Party Parliamentary Group on Fair Business Banking, which includes members from both the House of Commons and the House of Lords, said the City watchdog should release all its information about the GRG case. In a statement, the group said: | The All Party Parliamentary Group on Fair Business Banking, which includes members from both the House of Commons and the House of Lords, said the City watchdog should release all its information about the GRG case. In a statement, the group said: |
| At the APPG we are extremely disappointed, but largely unsurprised, by [the FCA] announcement. It is simply not good enough from a regulatory perspective to say that the powers to hold individuals to account simply do not exist. | At the APPG we are extremely disappointed, but largely unsurprised, by [the FCA] announcement. It is simply not good enough from a regulatory perspective to say that the powers to hold individuals to account simply do not exist. |
| Kevin Hollinrake MP, Co-Chair of the APPG, said: “The FCA should release all findings and evidence they have obtained in their investigation of RBS GRG, unredacted so that the individuals who are responsible for this misconduct are in the public domain. The FCA have an obligation to release this information so that politicians can have a say in whether it is truly the case that no further actions can be applied. As lawmakers we have an obligation to the public to ensure that those who are responsible are accountable and not untouchable, as indeed is the case now where the individuals responsible are protected by the regulatory inadequacy of our current system”. | Kevin Hollinrake MP, Co-Chair of the APPG, said: “The FCA should release all findings and evidence they have obtained in their investigation of RBS GRG, unredacted so that the individuals who are responsible for this misconduct are in the public domain. The FCA have an obligation to release this information so that politicians can have a say in whether it is truly the case that no further actions can be applied. As lawmakers we have an obligation to the public to ensure that those who are responsible are accountable and not untouchable, as indeed is the case now where the individuals responsible are protected by the regulatory inadequacy of our current system”. |
| He also stated: “The FCA should release all of their findings so that the untouchable senior managers at RBS GRG, many who remain working in the banking sector, are held to account. The public, the press and indeed the financial sector themselves have a right to know who is responsible for this misconduct”. | He also stated: “The FCA should release all of their findings so that the untouchable senior managers at RBS GRG, many who remain working in the banking sector, are held to account. The public, the press and indeed the financial sector themselves have a right to know who is responsible for this misconduct”. |
| What has to be made absolutely clear is that this is not the FCA giving RBS an innocent verdict in relation to their GRG unit. It is clear that the FCA do not have the powers to adequately investigate and discipline instances of misconduct to a degree which gives victims any confidence. | What has to be made absolutely clear is that this is not the FCA giving RBS an innocent verdict in relation to their GRG unit. It is clear that the FCA do not have the powers to adequately investigate and discipline instances of misconduct to a degree which gives victims any confidence. |
| In the wake of the Financial Conduct Authority saying it does not have sufficient powers to disciple Royal Bank of Scotland executives over the GRG scandal, the head of the Treasury Select Committee has called for a review into whether new legislation is needed. MP Nicky Morgan MP said: | In the wake of the Financial Conduct Authority saying it does not have sufficient powers to disciple Royal Bank of Scotland executives over the GRG scandal, the head of the Treasury Select Committee has called for a review into whether new legislation is needed. MP Nicky Morgan MP said: |
| It will be disappointing and bewildering for those who got caught up in GRG’s actions that the FCA is not able to act. This demonstrates the need for a change in how lending for SMEs is regulated. The Government should stand ready to introduce any legislation required when it sees the outcome of current reports on redress and should also urgently consider what additional powers the FCA requires to act in cases such as GRG. | It will be disappointing and bewildering for those who got caught up in GRG’s actions that the FCA is not able to act. This demonstrates the need for a change in how lending for SMEs is regulated. The Government should stand ready to introduce any legislation required when it sees the outcome of current reports on redress and should also urgently consider what additional powers the FCA requires to act in cases such as GRG. |
| Here’s Reuters wrapping up the day’s eurozone economic news: | Here’s Reuters wrapping up the day’s eurozone economic news: |
| The euro zone economy grew more slowly than expected in the second quarter, preliminary data showed on Tuesday, but headline and core inflation accelerated with unemployment stabilizing at a lower level. | The euro zone economy grew more slowly than expected in the second quarter, preliminary data showed on Tuesday, but headline and core inflation accelerated with unemployment stabilizing at a lower level. |
| The European Union’s statistics office Eurostat estimated that gross domestic product in the 19 countries sharing the euro expanded 0.3 percent quarter-on-quarter in the April-June period and was 2.1 percent higher against the same period of 2017. | The European Union’s statistics office Eurostat estimated that gross domestic product in the 19 countries sharing the euro expanded 0.3 percent quarter-on-quarter in the April-June period and was 2.1 percent higher against the same period of 2017. |
| Economists polled by Reuters had expected a 0.4 percent quarterly expansion and a 2.2 percent year-on-year rise. | Economists polled by Reuters had expected a 0.4 percent quarterly expansion and a 2.2 percent year-on-year rise. |
| Headline consumer inflation accelerated to 2.1 percent year-on-year in July from 2.0 percent in June, mainly because of a spike in the cost of energy. | Headline consumer inflation accelerated to 2.1 percent year-on-year in July from 2.0 percent in June, mainly because of a spike in the cost of energy. |
| Core inflation, which excludes energy costs as well as unprocessed food and which the European Central Bank looks at in policy decisions, also rose to 1.3 percent year-on-year from 1.2 percent in June, beating economists expectations. | Core inflation, which excludes energy costs as well as unprocessed food and which the European Central Bank looks at in policy decisions, also rose to 1.3 percent year-on-year from 1.2 percent in June, beating economists expectations. |
| An even narrower core inflation measure that economists pay attention to, which excludes also the costs of alcohol and tobacco, also rose to 1.1 percent from 0.9 percent in July — again, above expectations. | An even narrower core inflation measure that economists pay attention to, which excludes also the costs of alcohol and tobacco, also rose to 1.1 percent from 0.9 percent in July — again, above expectations. |
| The ECB wants to keep headline inflation below, but close to, 2 percent over the medium term. | The ECB wants to keep headline inflation below, but close to, 2 percent over the medium term. |
| Separately, Eurostat said unemployment in the euro zone was at 8.3 percent in June, unchanged from a downwardly revised 8.3 percent in May. | Separately, Eurostat said unemployment in the euro zone was at 8.3 percent in June, unchanged from a downwardly revised 8.3 percent in May. |
| Euro zone economic growth slows in second quarter, inflation accelerates https://t.co/GAMqoRy5fi via @Reuters pic.twitter.com/hHORuU5lCT | Euro zone economic growth slows in second quarter, inflation accelerates https://t.co/GAMqoRy5fi via @Reuters pic.twitter.com/hHORuU5lCT |
| Commenting on the eurozone inflation figures, Joshua Mahony, market analyst at IG said: | Commenting on the eurozone inflation figures, Joshua Mahony, market analyst at IG said: |
| Eurozone inflation data has pushed pressure back onto Mario Draghi & co, with headline CPI breaching the 2% target for the first time since 2012. While much of the rise in inflation can be attributed to the incredible 9.4% annual rise in the energy component, the fact that we have also seen core inflation jump 0.2% means that many of the underlying components are also being affected. With the ECB set to end their QE programme by the end of the year, markets will be keen to see Draghi’s response should inflation continue to push higher. | Eurozone inflation data has pushed pressure back onto Mario Draghi & co, with headline CPI breaching the 2% target for the first time since 2012. While much of the rise in inflation can be attributed to the incredible 9.4% annual rise in the energy component, the fact that we have also seen core inflation jump 0.2% means that many of the underlying components are also being affected. With the ECB set to end their QE programme by the end of the year, markets will be keen to see Draghi’s response should inflation continue to push higher. |
| Surprised not a bigger bump in qoq growth given the shabby weather-induced Q1. As if the region's politicians did not already know it...a big work-in-progress! https://t.co/Ayw6tTG2Vf | Surprised not a bigger bump in qoq growth given the shabby weather-induced Q1. As if the region's politicians did not already know it...a big work-in-progress! https://t.co/Ayw6tTG2Vf |
| The weaker than expected eurozone growth figures mean the European Central Bank is unlikely to raise rates before next autumn, says ING Bank senior economist Bert Colijn: | The weaker than expected eurozone growth figures mean the European Central Bank is unlikely to raise rates before next autumn, says ING Bank senior economist Bert Colijn: |
| The Eurozone economy grew by just 0.3% QoQ in the second quarter with inflation increasing to above 2%. Any “behind the curve” thoughts that may have surfaced earlier this year can be parked. | The Eurozone economy grew by just 0.3% QoQ in the second quarter with inflation increasing to above 2%. Any “behind the curve” thoughts that may have surfaced earlier this year can be parked. |
| Whereas the decline in growth in Q1 was considered to be due to one-offs, it seems like excuses are running out to explain the even weaker Q2 reading. Perhaps still temporary, but factors with a longer shelf life seem to have brought Eurozone GDP growth down to a lower cruising speed for the moment. The confidence impact of a trade row and weaker real household income growth seem to be spoiling the European party for the moment. | Whereas the decline in growth in Q1 was considered to be due to one-offs, it seems like excuses are running out to explain the even weaker Q2 reading. Perhaps still temporary, but factors with a longer shelf life seem to have brought Eurozone GDP growth down to a lower cruising speed for the moment. The confidence impact of a trade row and weaker real household income growth seem to be spoiling the European party for the moment. |
| Trade uncertainty seems to have already had a significant effect on the Eurozone economy in Q2. While the impact on real export growth has likely been small over the second quarter, the confidence factor has been more important. With lower confidence among businesses and consumers, concerns have likely translated into somewhat weaker domestic demand growth. In an economy in which capacity constraints abound and credit conditions remain favourable, confidence is the likely factor keeping investment down. | Trade uncertainty seems to have already had a significant effect on the Eurozone economy in Q2. While the impact on real export growth has likely been small over the second quarter, the confidence factor has been more important. With lower confidence among businesses and consumers, concerns have likely translated into somewhat weaker domestic demand growth. In an economy in which capacity constraints abound and credit conditions remain favourable, confidence is the likely factor keeping investment down. |
| Lower consumer confidence has taken some of the wind out of the sails from consumption growth. This comes on the back of trade concerns, but also slowing growth in real household income per capita since mid-2017. The second quarter has added to this trend because the rapid pickup in fuel prices has likely outstripped wage growth. French data - the breakdown of GDP is already available in France - confirms that private consumption performed poorly as it declined by 0.1%. | Lower consumer confidence has taken some of the wind out of the sails from consumption growth. This comes on the back of trade concerns, but also slowing growth in real household income per capita since mid-2017. The second quarter has added to this trend because the rapid pickup in fuel prices has likely outstripped wage growth. French data - the breakdown of GDP is already available in France - confirms that private consumption performed poorly as it declined by 0.1%. |
| Inflation remained high despite the weaker growth path that the Eurozone economy is on in 2018 but mainly driven by higher energy prices. The energy index increased by 9.4% YoY. These effects will weaken over the coming months, bringing the inflation rate more in line with core inflation. The core rate picked up to 1.1%, which is where it was in May as well. This is still weak and very much in line with ECB expectations. As the energy effects are temporary, the high inflation rate should be taken with a grain of salt from a policy perspective at the moment, so will the ECB. | Inflation remained high despite the weaker growth path that the Eurozone economy is on in 2018 but mainly driven by higher energy prices. The energy index increased by 9.4% YoY. These effects will weaken over the coming months, bringing the inflation rate more in line with core inflation. The core rate picked up to 1.1%, which is where it was in May as well. This is still weak and very much in line with ECB expectations. As the energy effects are temporary, the high inflation rate should be taken with a grain of salt from a policy perspective at the moment, so will the ECB. |
| The implications of the lower cruising speed of the Eurozone economy are quite clear. The weaker cyclical picture and low core inflation provide little reason for the ECB to increase rates before autumn next year. | The implications of the lower cruising speed of the Eurozone economy are quite clear. The weaker cyclical picture and low core inflation provide little reason for the ECB to increase rates before autumn next year. |
| Royal Bank of Scotland has welcomed (unsurprisingly) the FCA statement. Chairman Howard Davies said: | Royal Bank of Scotland has welcomed (unsurprisingly) the FCA statement. Chairman Howard Davies said: |
| The Board welcomes the FCA’s confirmation that it has concluded its investigation into the bank and that no further action will be taken. We await the publication of the FCA’s full account and will reflect carefully on its findings to learn any further lessons from what was a hugely challenging time for the bank, its customers and the wider economy. | The Board welcomes the FCA’s confirmation that it has concluded its investigation into the bank and that no further action will be taken. We await the publication of the FCA’s full account and will reflect carefully on its findings to learn any further lessons from what was a hugely challenging time for the bank, its customers and the wider economy. |
| The Board continues to focus on putting things right for customers through our complaints process and ensuring that past mistakes cannot be repeated. The way the bank deals with business customers in financial difficulty is fundamentally different now. | The Board continues to focus on putting things right for customers through our complaints process and ensuring that past mistakes cannot be repeated. The way the bank deals with business customers in financial difficulty is fundamentally different now. |
| As a reminder, here is our story from February which includes details of how RBS mistreated its business customers: | As a reminder, here is our story from February which includes details of how RBS mistreated its business customers: |
| Elsewhere, the Financial Conduct Authority has said it can take no action to discipline Royal Bank of Scotland management over the mistreatment of small and medium sized businesses through its Global Restructuring Group subsidiary. Andrew Bailey, FCA chief executive said: | Elsewhere, the Financial Conduct Authority has said it can take no action to discipline Royal Bank of Scotland management over the mistreatment of small and medium sized businesses through its Global Restructuring Group subsidiary. Andrew Bailey, FCA chief executive said: |
| Given the serious concerns that were identified in the independent review it was only right that we launched a comprehensive and forensic investigation to see if there was any action that could be taken against senior management or RBS. It is important to recognise that the business of GRG was largely unregulated and the FCA’s powers to take action in such circumstances, even where the mistreatment of customers has been identified and accepted, are very limited. Taking action was therefore always going to be difficult and challenging but after carefully considering all the evidence we have concluded that our powers to discipline for misconduct do not apply and that an action in relation to senior management for lack of fitness and propriety would not have reasonable prospects of success. | Given the serious concerns that were identified in the independent review it was only right that we launched a comprehensive and forensic investigation to see if there was any action that could be taken against senior management or RBS. It is important to recognise that the business of GRG was largely unregulated and the FCA’s powers to take action in such circumstances, even where the mistreatment of customers has been identified and accepted, are very limited. Taking action was therefore always going to be difficult and challenging but after carefully considering all the evidence we have concluded that our powers to discipline for misconduct do not apply and that an action in relation to senior management for lack of fitness and propriety would not have reasonable prospects of success. |
| We have consulted with independent, external leading counsel who has confirmed that the FCA’s conclusions are correct and reasonable. | We have consulted with independent, external leading counsel who has confirmed that the FCA’s conclusions are correct and reasonable. |
| 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. | 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. |
| The fact that we can’t take action in no way condones the behaviour of RBS. We expect high standards from the firms we regulate and RBS fell well short in its treatment of GRG customers. | The fact that we can’t take action in no way condones the behaviour of RBS. We expect high standards from the firms we regulate and RBS fell well short in its treatment of GRG customers. |
| We feel strongly that those companies that have suffered loss as a result of how they were treated whilst in GRG must be appropriately compensated. We are closely monitoring the complaints process overseen by Sir William Blackburne, an independent third party, to ensure that things are put right. | We feel strongly that those companies that have suffered loss as a result of how they were treated whilst in GRG must be appropriately compensated. We are closely monitoring the complaints process overseen by Sir William Blackburne, an independent third party, to ensure that things are put right. |
| Meanwhile eurozone inflation has come in higher than forecast. | Meanwhile eurozone inflation has come in higher than forecast. |
| The headline figure rose by 2.1% year on year in July compared to 2% the month before and expectations of an unchanged number. | The headline figure rose by 2.1% year on year in July compared to 2% the month before and expectations of an unchanged number. |
| Eurozone GDP grew by 2.1% year on year in the second quarter, down from 2.5% and lower than the forecast 2.2%. | Eurozone GDP grew by 2.1% year on year in the second quarter, down from 2.5% and lower than the forecast 2.2%. |
| On a quarter by quarter basis it grew by 0.3%, compared to expectations of a 0.4% rise. | On a quarter by quarter basis it grew by 0.3%, compared to expectations of a 0.4% rise. |