Royal Bank of Scotland’s boss has called for regulation of small business lending in the UK, despite dodging disciplinary action over the mistreatment of SMEs by its Global Restructuring Group earlier this year.
Ross McEwan did not say whether the responsibility should fall at the door of City watchdog the Financial Conduct Authority (FCA), but admitted that the market sorely required proper checks and routes for complaints.
“I think somebody needs to be there to put a second view around the SME market place,” he said in an interview with the Press Association.
“Some sort of regulation around that seems to be needed.”
His backing comes as a surprise given that the lack of regulation of small business lending helped RBS avoid disciplinary action from the FCA earlier this year.
The watchdog this summer concluded that the the activities of RBS’s now-defunct Global Restructuring Group (GRG) were not within its remit and that its powers did not apply.
The GRG has been accused of pushing firms towards failure in the hope of picking up assets on the cheap, though the FCA said there was no evidence of dishonesty or lack of integrity.
The influential Treasury Committee - headed by Conservative MP Nicky Morgan - said it was “disappointing and bewildering” that the FCA is not able to act, adding that the case demonstrated the need for change in how lending for SMEs is regulated.
Ms Morgan said in July: “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.”
While the FCA has proposed expanding the Financial Ombudsman Service (FOS) to small business complaints, the Treasury Committee has questioned whether the FOS can handle an expanded remit.
The All Party Parliamentary Group (APPG) on Fair Business Banking is also calling for a Financial Services Tribunal that would help SMEs resolve financial disputes with banks, holding powers to rule on awards of up to £1 million.