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The UK financial watchdog has taken the unusual step of issuing a five-paragraph explanation over allegations made earlier this week that it chose not to publish a contentious independent report into how Royal Bank of Scotland treated small-business customers because the watchdog was afraid of being sued.
The Financial Times was among media that reported the Financial Conduct Authority chose not to publish the report into RBS’s now-defunct Global Restructuring Group after the watchdog received legal advice that it could be sued as a result. The media reports were based on minutes of a board meeting the FCA released after a Freedom of Information request and which were first reported by the Times.
“Publishing the full skilled person’s report would be unlawful without getting the necessary consents from all affected parties as 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,” the FCA said in Friday’s statement.
Many small-business customers of GRG, which is now defunct, claimed they were pushed to the brink of collapse and restructured for profit after the financial crisis. The FCA commissioned a review, known as a Section 166 or skilled person’s report, into the unit by Promontory, the consultancy group.
Despite mounting pressure, the FCA has resisted publishing this review, citing legislation that keeps such reviews confidential. The confidentiality is RBS’s to waive rather than that of the FCA. The regulator has also long said that it is concerned that individuals identified in the report would have the right to go through so-called Maxwellisation — the process by which those criticised in public reports make representations before it is published — which can take many months.
It added on Friday that it remains “firmly of the view that the approach we took was fair and balanced, a view we have had confirmed by external independent Counsel.”
The FCA has a further enforcement investigation ongoing into GRG, and at least one police inquiry exists.