UPDATE 1-UK watchdog defends lack of penalties in RBS small-business scandal <!-- no image --> <div>Britain's financial watchdog has defended its decision not to penalise lender RBS or its former executives for past mistreatment of small business customers.<div class="feedflare"> <a href="http://feeds.reuters.com/~ff/reuters/UKBankingFinancial?a=tQ2MAyxu-SA:RNLe6ZnYUzU:yIl2AUoC8zA"><img src="http://feeds.feedburner.com/~ff/reuters/UKBankingFinancial?d=yIl2AUoC8zA" border="0"></a> <a href="http://feeds.reuters.com/~ff/reuters/UKBankingFinancial?a=tQ2MAyxu-SA:RNLe6ZnYUzU:V_sGLiPBpWU"><img src="http://feeds.feedburner.com/~ff/reuters/UKBankingFinancial?i=tQ2MAyxu-SA:RNLe6ZnYUzU:V_sGLiPBpWU" border="0"></a> <a href="http://feeds.reuters.com/~ff/reuters/UKBankingFinancial?a=tQ2MAyxu-SA:RNLe6ZnYUzU:F7zBnMyn0Lo"><img src="http://feeds.feedburner.com/~ff/reuters/UKBankingFinancial?i=tQ2MAyxu-SA:RNLe6ZnYUzU:F7zBnMyn0Lo" border="0"></a> </div><img src="http://feeds.feedburner.com/~r/reuters/UKBankingFinancial/~4/tQ2MAyxu-SA" height="1" width="1" alt=""></div> Posted by Reuters