Roger Mullin says tighter regulation of UK banks needed
The National, 12.10.16
A SCOTTISH MP is calling for regulation of the UK’s banking sector to be strengthened in the wake of allegations that Royal Bank of Scotland preyed on up to 12,000 business customers and drove many to the wall to cash in on their assets.
Roger Mullin, the SNP’s Treasury spokesperson, stopped short of saying we should follow Iceland’s lead – where 26 financiers were jailed last year for 74 years for their part in the 2008 economic meltdown – but said the Government should end its “love affair” with the banks.
He told The National: “The regulatory framework for banks is not sufficient and part of the problem is that some of the most senior people in banks seem able to walk away from crises they create with handsome pensions and the like, while it is people much further down the chain – in particular customers – who are having to suffer.
“I personally think there needs to be a very thorough look at how we right this ship.
“Unfortunately the Government seems to continue to want to have almost a love affair with the banks as if they have to mollycoddle them instead of allowing them to protect themselves.
“And that is not a sensible approach to the banking sector and it’s not a sensible approach to trying to get good governance of it.”
Mullin added: “Where there is institutional wrongdoing people who lead those institutions need to be held to account.”
His comments came as anger continued to mount over allegations concerning RBS’s Global Restructuring Group (GRG), which was set up to provide assistance to struggling firms to return them to profit.
However, leaked internal documents appeared to show that thousands of customers who were put into the GRG had their loans restructured with inflated interest rates.
This was all claimed to have happened during the tenure of Fred “the Shred” Goodwin, the disgraced former CEO of RBS Group, although Mullin said he was not solely to blame.
“There was an entire board that was overseeing the bank so the governance was at fault as well as an individual chief executive,” he said.
“To be honest, there remain across the banking sector matters of poor leadership and governance that cause me concern. It’s fair enough to say some people should have been better held to account at the time, that is in my view correct, but that in itself would not be enough.
“What we need to do is have a much more critical and rigorous eye placed across the banking sector.” City regulator, the Financial Conduct Authority, has been reviewing
RBS’s treatment of struggling business customers since early 20914, when it appointed Promontory Financial Group and Mazars to undertake an independent “skilled persons” report.
A FCA spokesperson told The National it was not in a position to comment on GRG until it had published its final findings.
“We can however, confirm that we have received the final report from the skilled person but there are a number of steps for us to complete before we are in a position to share our final findings, which will include an assessment of all relevant material, of which the skilled person’s report is one,” added the spokesperson.
“This has been a complex and lengthy review – it is therefore important that we do not rush the final stages of this process.”
The Federation of Small Businesses (FSB) said if the accusations were proven to have foundation, it would be “particularly shocking given the bank’s previous insistence that it had not exploited vulnerable firms for financial gain”.
Mike Cherry, FSB’s national chairman, added: “Many business owners who were in urgent need of assistance lost their livelihoods and, as a result, their physical and mental wellbeing after dealing with GRG. Today’s revelation threatens to further reduce the already low levels of trust that exist between small businesses and certain sections of the banking industry.
“The news adds to a catalogue of historic complaints from SMEs about the service provided to them by RBS. The bank has worked hard to improve its reputation.
“However, these reports follow recent threats to charge small business customers for depositing in current accounts. RBS must do better to make it unequivocally clear that it backs small business.”
Meanwhile, RGL Management, a group formed to sue RBS, confirmed that it will launch a class (group) action against the bank early next year on behalf of hundreds of customers.
James Hayward, RGL’s CEO, said: “Many of the victims of GRG have claims that are time-barred. But those claims can be resurrected by virtue of RBS’s concealment of the true nature of GRG’s activities.”
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