Ban ‘no threat’ to Promontory’s high ground over RBS inquiry

The Times James Hurley Enterprise Editor

The New York State department of ­financial services has accused Promontory of show a “lack of independent judgment”  Spencer Platt/Getty Images

Promontory Financial Group’s role in producing a long-awaited report into Royal Bank of Scotland’s treatment of small businesses is not under threat, the Financial Conduct Authority has said, despite the consulting firm being banned by an American regulator.

Promontory has been suspended by the New York State department of financial services amid allegations that it “toned down” a report it filed to regulators regarding sanctions violations by Standard Chartered.

On Monday the department accused it of showing a “lack of independent judgment” when it wrote a report into claims that Standard Chartered had helped its clients to bypass American sanctions against Iran.

Promontory, alongside Mazars, the accountant, is leading the FCA’s “skilled-persons review” into the scandal surrounding RBS’s Global Restructuring Group (GRG), which is accused of mistreating small business customers as part of a drive to clean up the bank’s balance sheet.

The FCA indicated that the action by its counterpart in New York would have no impact on the progress of the study of allegations of wrongdoing within GRG. “The investigation is ongoing, with Promontory and Mazars still working on it,” an FCA spokesman said.

Staff from the regulator are working on the GRG investigation alongside Promontory and Mazars to provide oversight of the process.

The New York regulator said that Promontory had made changes to its Standard Chartered reports to “soften” and “tone down” the language to make them more favourable to the bank, and to avoid additional questions and investigations from regulators.

It said that one Promontory staff member wrote during its Standard Chartered investigation that “the most important thing is that we get to the end of the project without jeopardising our relationship with [Standard Chartered Bank] as a whole”.

The consulting firm is also accused of ordering aspects of its reports to be made “sterile” and “more bland” to avoid offending the bank.

The New York regulator said that it was suspending Promontory from future regulatory consultancy work.

The Times revealed last month that publication of the GRG report had been delayed for a third time, with the findings now expected to be published more than a year later than planned.

Promontory said that it would fight the suspension in court, claiming that a “handful of emails” had been taken “out of context”. It added: “We are convinced that an impartial review of the facts will show that our professionals acted at all times with appropriate independence and an unwavering commitment to factual accuracy.”

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