RBS should have accepted criticisms, FCA's Bailey says

Last week the FCA released a summary of an independent report into the conduct of RBS's GRG unit, which former customers have accused of driving them out of business in the five years after 2008.

The report found widespread bad practice at GRG and the FCA has opened a formal investigation.

Giving evidence to the Treasury committee on Tuesday, Andrew Bailey, the FCA's chief executive, said: "The report is strongly critical of RBS. I think it is frankly unfortunate that RBS have not accepted that more readily. I think they should do. A lot of time and a lot of effort and a lot of work has been done on this."

Bailey said there was systematic and widespread bad handling of cases by GRG and struggling businesses – a description RBS has resisted. "The use of the word widespread is not inappropriate," he said, adding that there was not evidence of a conspiracy.

He also questioned RBS's statement, in a letter to MPs, that GRG did not put an undue burden on businesses when they were referred to it.

GRG was meant to help struggling businesses to reorganise but former customers have accused it of driving them into administration and then picking up their assets cheaply.

Nicky Morgan, who chairs the committee, said customers referred to GRG had lost lost their businesses and suffered mental health problems and family breakdowns. She said the GRG affair had undermined confidence in the banking system's treatment of small businesses.

The FCA's investigation will include how GRG valued its customers' businesses and its poor explanation of fees, Bailey said.

Bailey said the FCA started work on an investigation into GRG over the summer. He said he could not estimate when the investigation would conclude.

"It depends where it leads to. It could lead to enforcement action. It doesn't necessarily lead to enforcement action … It is focused and I'm very clear that it must be focused."