FCA boss defends lack of action against RBS turnaround unit

The boss of the City watchdog used a speech delivered at the FCA’s annual public meeting to address its recent decision to hold off disciplining anyone at RBS after concluding that the Global Restructuring Group’s (GRG) activities were not within its remit and that its powers did not apply.

Senior management were also off the hook after the FCA said action over lack of fitness and propriety “would not have reasonable prospects of success”.

“It is important to recognise... that the business of GRG was largely unregulated and the FCA’s powers in such circumstances are therefore very limited”, Mr Bailey said in his speech on Tuesday.

“After considering all the evidence we concluded that our powers to discipline for misconduct did not apply and that any action in relation to senior management would not have reasonable prospects of success.

“Because of the importance of the issue, we had this conclusion ratified by independent senior counsel.

“I recognise the frustration this decision caused to GRG customers, but I’d like to make clear that we explored all the options available to us before arriving at this conclusion.”

Mr Bailey promised to release more details on how the decision was reached, and offered assurance that the FCA was keeping abreast of the ongoing complaints process over GRG, which has been accused of pushing firms towards failure in the hope of picking up assets on the cheap.

Mr Bailey also used his speech on Tuesday to address progress on two HBOS cases, including its investigation into former senior managers of the failed bank after a 2015 review found its top brass were ultimately responsible for its demise.

He said a substantial amount of information has been gathered and that new, potentially relevant documents are now being obtained.

While there is “considerable public interest” in the investigations, Mr Bailey stressed that “significant resources and time” were being committed to the case.

“Investigations like these, into events that took place a number of years ago, can take longer than is often appreciated. We are, though, committed to completing them as soon as possible.

“It is, however, frustrating that certain parties have determined to reveal the existence of more documentation at such a late stage.”