FCA report on RBS does not reflect well on anyone, least of all politicians
The media’s claws were well and truly sunk into the FCA last week following publication of its final report into the goings-on at RBS’ notorious Global Restructuring Group (GRG) during the banking crisis. Five years in preparation, the 77-page report takes us no closer to bringing to book those most responsible within RBS for wrecking businesses, reputations and, in some cases, lives. Indeed, the findings merely go to show that rules put in place to protect bank customers have served only to protect the perpetrators.
The point was even made that the FCA would be breaking the law if it actually dared put names to the people involved, even though everyone knows who they are. So it’s OK that businesses were ruined, jobs and homes were lost while these individuals have been allowed to move on to other well-paid City jobs. The outcome does everything to highlight that bankers are truly a protected species and that the FCA is impotent.
It hasn’t helped either that the report followed hot on the heels of the fall from grace of Neil Woodford, one of the City’s star fund managers. Why didn’t the FCA see it coming and do something about it, etc? Predictably, some are suggesting that there should now be a hefty new rule book for investment managers – a bit late for that, I’d say.
Outrage fills the air, but a more profound question might be why we continue to pour huge sums of money into regulation that doesn’t work. The FT pointed out at the weekend that the FCA cost £547m to run in 2017-18, the Financial Services Compensation Scheme (FSCS) £612m and, when you add in the Financial Ombudsman Services (FOS), the Prudential Regulation Authority (PRA) and Payment Systems Regulator you end up with a total of £1.7bn. The same article also pointed out that the money raised from fines imposed by the FCA – originally destined for charities and the NHS – actually goes to the Treasury.
And wasn’t it the Treasury, according to the FCA’s GRG report, which pressured RBS to sacrifice its small business borrowers to protect the interests of shareholders – ie, the Government? Best not name the RBS/GRG executives because they might start pointing some fingers themselves.
In the meantime, it seems harsh to heap opprobrium on the head of Andrew Bailey when he only joined the FCA in 2016.