The UK’s Treasury committee has published the report on practices in RBS’s Global Restructuring Group unit.
Yesterday FCA chair Andrew Bailey had handed over the report, which the Financial Conduct Authority (FCA) commissioned financial services advisory Promontory to produce, to the committee.
As the FCA reported in their interim summary of the findings in November, one of the report’s main findings was around RBS relationship managers’ lack of transparency when explaining the rationales behind pricing and fees increases, and the lack of a proper paper trail to evidence pricing of loans or services.
Promontory said that some of the pricing observed was “in our view, inappropriate when assessed against formal risk return principles or otherwise excessive – although we were not always able to evidence this reliably.” Promontory also said it was struck by how often proposals to revise pricing had been submitted to customers, often without proper explanation.
“It was clear to us that this was often disruptive and confusing to customers,” the report said. “At a minimum it made long-term financial planning difficult.”
In 83 cases, Promontory found “that there had been a failure to adequately explain pricing changes to customers”. The lack of clarity in pricing changes had been identified as a major concern in multiple customer satisfaction studies conducted by RBS.
According to the report, relationship managers had “wide discretions” available when assessing pricing and charges, but this was not overseen appropriately, and “gave rise to an environment where there were inadequate controls over pricing practice”.
A lack of adequate record-keeping made it impossible to reconstruct on what rationales a pricing decision had been made, and precluded the possibility to revise it.
Promontory found an undue and inappropriate focus on generation of income from SME customers between 2008 and 2013. A policy revision after that period came “too late” and “was, in any event, too generic in nature”.