Companies hurt by RBS pursue the regulator

Hundreds of businesses are threatening the City regulator with legal action because of delays to a long-awaited report into the activities of Royal Bank of Scotland’s restructuring unit.

Lawyers acting for more than 400 companies, which claim they were mistreated by RBS’s Global Restructuring Group have written to the Financial Conduct Authority saying that they plan to launch a judicial review into the handling of the issue.

Some businesses fear that their legal claims could expire unless the findings of the FCA report are made public soon.

The RBS GRG Business Action group wrote to Andrew Bailey, chief executive of the FCA, on Friday to complain about unreasonable delays to the publication of the report, which was to be issued almost two years ago.

There have been many changes to the timetable, with the FCA citing the complexity. In July, Mr Bailey told MPs that he hoped the report would be published this year.

The Business Action Group told Mr Bailey that it would launch proceedings against the regulator in the High Court unless it was given urgent assurances that the report would be published imminently.

The FCA review was conducted by Promontory, a financial consultancy, and Mazars, an accountancy firm. It was handed to the FCA about six months ago and has been seen by RBS but there is still no firm schedule for publication.

It is understood that one of the factors is whether the regulator will recommend compensation for affected companies.

The restructuring group was told to repair RBS’s balance sheet after the financial crisis by getting out of lending that was unprofitable and tying up too much of the bank’s capital.

Companies claim that this led to excessive and opaque fees, questionable valuations of their assets and being unnecessarily forced out of business.

It is also understood that John McDonnell, the shadow chancellor, is considering challenging the government over the extent of the Treasury’s involvement.

Derek Sach, the former head of the RBS group, told MPs two years ago that he had “robustly resisted” pressure from the government’s Asset Protection Agency to “go for more foreclosure” of companies.

A rival group which is also planning legal action against GRG said it had given up on waiting for the publication of the FCA report.

It said it will launch its own legal action against the bank this year.

A spokesman for the Financial Conduct Authority declined to comment.

James Hurley, Enterprise Editor

The Times, 12th September 2016