CQI policy director on RBS governance failures

Estelle Clark, Executive Director of Policy at the CQI, has raised three critical questions about the mistreatment of small businesses by RBS’s Global Restructuring Group (GRG). In her City A.M. column, published online on 6 March 2018, Clark said: “RBS cannot hide behind the gabs in regulations covering small businesses. Good governance is not a tick-box exercise, it is about taking responsibility.”

The first question she raises is about what the board knew, as it is responsible for the company’s culture as a whole. “It is simply not enough for Ross McEwan to now say that the poor treatment of customers, specifically the ‘Just Hit Budget’ memo (which prioritised squeezing money out of struggling SMEs at all costs and advised giving them enough rope to ‘hang themselves’), was not wider RBS policy and that the individuals concerned are no longer with the bank, effectively absolving the board of any operational responsibility.” 

The second point she makes is on the instructions the government gave to the board. “With a 70% stake, the government was in a position to demand that customers were treated with respect and that jobs and livelihoods were prioritised,” Clark writes. “I am not for a moment suggesting that ‘bad’ businesses be propped up, but this report is clear that good businesses that could have been supported and saved were sent to the wall.”

Thirdly, Clark points out that the scandal uncovers a large hole in the financial protection offered to small businesses. “The fact that SMEs have no recourse to the Financial Ombudsman and that the Financial Conduct Authority has, unfortunately, had to admit that their welfare is beyond its remit has left many of GRG’s customers devoid of any means of redress,” she writes. “This has to change.”