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RBS at risk of 'further action' from watchdog over controversial turnaround unit

The Royal Bank of Scotland'sturnaround unit mistreated customers but did not force them to go bust in order to profit, the City watchdog has said - though it has warnedthere could be grounds for further action.
TheFinancial Conduct Authoritypublished an update of its review intothe Royal Bank of Scotland's controversialGlobal Restructuring Group (GRG) on Monday,weeks afterMPs threatened to use parliamentary powersto force its publication.
GRG has beenaccused of helping push firms into bankruptcyafter the financial crash in order to sweep up their assets cheaply.
In a summary of its review, the FCApointed to "widespread inappropriate treatment" of smaller customers and identified a number of failings.
These included "a failure by RBSto adopt adequate procedures concerning the relationship with customers" as well asfailures to "ensure that appropriate and robust valuations were made by staff" inthe unit.
However the regulator did not find that the bank "set outto artificially engineer a position" to push a customer into the restructuring unit, noting that all of the companies were clearly infinancial difficulty.
RBS at risk of 'further action' from watchdog over controversial turnaround unit

Ross McEwan, chief executive of the Royal Bank of Scotland,noted that "the most serious allegations made against the bank have not been upheld" .
Even so, FCA chief executiveAndrew Bailey said the watchdog was"investigating the matters arising" and looking at "whether there is any basis for further action within our powers".
Thereview also pointed tothe wider issue of protections available to small and medium sized businesses "in particular for less sophisticated SMEs and vulnerable persons" and suggested extendingregulations covering unfair contract terms as well as broadening out the regulator's own remit.
Mr Bailey said commercial lending is largely unregulated in the UK andthe report "highlighted a gap in support for smaller businesses with genuine grievances about business banking conduct issues that could benefit from impartial assessment and quick resolution."
On the whole, thesummary is consistent withpreliminary findings announced by the FCAin November last year. It also matchesaleak earlier this yearwhich notedthat92pcof potentially viable businesses that went into the GRG division "had experienced some inappropriate actions in the handling of their case by RBS."
RBS chief executive Ross McEwan reiterated that the most serious allegations made against the bank had not been upheld."The culture, structure and way RBS operates today have all changed fundamentally since the period under review," he said.
The review coverstreatment of small and medium-sized businesscustomers that were referred to GRG, which wasset up to help business customers in trouble,between January 2008 and December 2013.The bank last year set up a ?400m compensation scheme, overseen by the retired judge Sir William Blackburne, for GRG customers.
Responding to the summary, chairman of the Commons Treasury Committee Nicky Morgan MP said: "It has taken the FCA too long to publish its summary of the skilled persons report, so this is not before time.
"The Committee has put in place an arrangement to ensure maximum possible transparency is brought to this issue."
Aspokesman for the GRG Action Group, which represents more than 500 businesses, called the summary report "insufficient" and urged for the report to published full.
"Far from drawing a line under this affair, todays report is just the start of the long journey to justice for GRGs victims," the person said.
His call was echoed by the Federation of Small Business, with its chairman Mike Cherry, adding: What really matters now is that GRG victims receive the compensation theyre due.
A decade is too long to wait for justice. We should be putting the victims first. That starts with equipping them with the information they need to achieve compensation.
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