(Bloomberg) -- The U.K. financial regulator published a final report confirming that it won’t take action against Royal Bank of Scotland Group Plc over failings in its small-business lending unit because laws don’t allow the agency to act.
The Financial Conduct Authority said there was no evidence that senior management "acted dishonestly or with a lack of integrity" between 2008 and 2013 in connection with RBS’s Global Restructuring Group, according to the report, which was published on Thursday. A key challenge was the "absence of regulatory rules against which the performance of senior management could be measured," the 77-page report said.
"Because most of GRG’s activities were outside our jurisdiction, we are not able to impose a financial penalty on RBS or any senior management," the FCA said. "While those directly affected might think the conduct of senior management was deficient in GRG, we do not believe we would have reasonable prospects of bringing successful prohibition proceedings against any member of senior management."
RBS Chairman Howard Davies said the bank welcomed the end of the investigation. The lender will continue to "focus on putting things right for these customers through our complaints process," he said in a statement.
Small-business borrowers and senior politicians have lambasted RBS and the FCA for how they have handled the scandal. An independent report in 2013 first documented widespread malpractice by RBS and GRG in how they treated their business customers. GRG had expanded its portfolio in the wake of the financial crisis to 65 billion pounds ($82 billion).
“The financial crisis saw a significant increase in the number of customers referred to GRG,” the FCA said. “Despite this, the changes to the systems and controls did not keep pace with what was needed in light of that increase and there is clearly evidence of poor behavior within GRG.”
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