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MPs Warn Treasury They Will “Remain Vigilant” About Inside Information On Government Share Sales

The chair of the Treasury committee wrote to the department's top civil servant after BuzzFeed News revealed confidential emails ahead of an RBS share sale.

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Reuters/Neil Hall

The chair of the Commons Treasury committee has warned that parliament must “remain vigilant” to ensure the government does not obtain “inside information” from the financial regulator before selling shares in publicly owned banks.

Andrew Tyrie MP wrote to Tom Scholar, the permanent secretary of the Treasury, last week to raise “important issues” highlighted by a BuzzFeed News investigation that revealed private emails between the department and the Financial Conduct Authority (FCA) ahead of a major government share sale.

Tyrie said parliament would keep a watchful eye on the extent to which “the FCA is entitled to pass to HM Treasury confidential information” and “whether the contents of an exchange could be constituted ‘inside information’” ahead of future share sales.

The emails, obtained by BuzzFeed News under freedom of information laws, showed top Treasury officials had obtained confidential information about an FCA investigation into the systematic abuse of small businesses by the taxpayer-owned Royal Bank of Scotland in 2015.

Responding to a request from the Treasury “in the light of potential sales of RBS shares”, Martin Wheatley, the then head of the FCA, had provided a list of dates on which public announcements about the investigation were likely. The tip-off was used to help time the sale of a £2.1 billion tranche of the government’s stake in the bank at a £1 billion loss ahead of the first planned announcements that August. Negative news about the FCA’s review could have sent the share price plummeting.

The Treasury insisted that its officials were allowed to exchange confidential information with the FCA through legal “gateways” and had been fulfilling a legal obligation to ensure that the timing of the sale did not coincide with any market-moving regulatory announcements. But MPs on the Treasury committee raised “deep concerns” about the fact that the government had obtained information that was not available to other potential investors, and questioned Scholar about the emails at a subsequent parliamentary hearing.

Scholar wrote to the committee days later explaining that the Treasury was legally required to “take steps to avoid selling shares at or near a time when public bodies may make announcements that may prove to be price sensitive, since that could undermine the credibility and integrity of the sales process in the eyes of markets and investors”.

He said the Treasury communicated with the regulator about official business through legal channels and “in this case, the only information sought and provided related to the possible timing of future public announcements”, which he maintained was not in itself price sensitive.

“We were not only fulfilling all of our legal responsibilities but also taking every possible precaution to secure the highest standards of integrity and credibility in our share sales process,” he concluded.

Andrew Tyrie MP
House of Commons

Andrew Tyrie MP

Tyrie responded last week: “The Treasury should not, under any circumstances, be using its privileged access to the FCA to obtain confidential regulatory information on the sale of its shares in financial assets.”

He acknowledged that Scholar’s letter had provided “some reassurance on that point” and that the Treasury had acted properly but said parliament would closely observe the extent to which the Treasury is able to obtain confidential information ahead of future share sales.

However, John Mann MP, a Labour member of the Treasury committee, said he was not fully satisfied by Scholar’s explanation and called for a closer examination of the contact between the government and the regulator. “Whilst it appears the Treasury was acting within its legal remit, most people would agree this doesn’t pass the smell test,” he said. “Parliament should scrutinise the way the Treasury conducts such matters.”

Both Scholar’s letter and Tyrie’s response were published by the Treasury committee on Monday morning.

The FCA announced earlier this month that its long-delayed inquiry into RBS had found evidence of “systematic” mistreatment of small firms by the bank’s troubled business division, Global Restructuring Group (GRG), but said its powers to intervene were “limited”.

The FCA’s statement was timed to coincide with the announcement by RBS of a £400 million compensation scheme, which was immediately branded “wholly inadequate” by victims. Market-sensitive details of the scheme were passed to journalists the night before the formal announcement, prompting the FCA to demand a leak inquiry at the bank.

The FCA said in its statement that it accepted RBS’s compensation scheme, which had been “developed with our involvement”. But it said that, despite evidence of “widespread” mistreatment of small businesses by the bank, its powers were limited because “the activities carried out by GRG and addressed by RBS’s proposals are largely unregulated”. While retail banking is heavily regulated to protect consumers, there are fewer controls on the services offered to business customers.

The dual announcements come weeks after BuzzFeed News and BBC Newsnight published evidence from a massive cache of leaked documents revealing how GRG drained businesses of cash and stripped their assets as part of a deliberate plan to boost revenues during the recession.

MPs and small-business groups reacted furiously to the announcements, branding the FCA report a “whitewash” and dismissing the bank’s compensation offer as “wholly inadequate”.

Tom Warren is an investigations correspondent for BuzzFeed News and is based in London.

Contact Tom Warren at

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