A pressure group has called for swift action to ensure that small business owners who were mistreated by the Royal Bank of Scotland (RBS) gain the compensation they deserve.
The Federation of Small Businesses (FSB) said that some of the victims had been campaigning for justice for a decade.
On Monday, it was revealed that Britain’s financial watchdog may still take action against RBS despite dismissing “serious allegations” about how the lender treated small business customers.
The Financial Conduct Authority (FCA) said it was investigating whether there was “any basis for further action” after publishing an interim report into RBS’s Global Restructuring Group (GRG) following intense political pressure.
In its report, the FCA said it had pinpointed “significant concerns” about how small business customers were treated by the bank. It said RBS had failed to support firms in a manner consistent with good turnaround practice; had placed an undue focus on pricing increases and debt reduction without considering the long-term viability of customers; and had failed to identify customer complaints and handle those complaints fairly.
RBS said it was pleased the “most serious allegations made against the bank have not been upheld”, and had set aside £400m to tackle complaints and compensation. It said £115m had been paid out to small businesses claiming mistreatment through an “automatic refund of complex fees”.
It added that 939 complaints had also been lodged with a process overseen by retired High Court judge Sir William Blackburne
Mike Cherry, FSB national chairman, said the summary was a welcome step forward in identifying exactly what happened to the victims of GRG.
He added: “The summary states that there was a systematic failure to manage the conflicts of interest inherent in the turnaround division.
“It surely follows that we must be able to see the full report in future in order to see how that systematic failure happened and who was responsible. The authors themselves express their preference for a whole version to be made public.
“What really matters now is that GRG victims receive the compensation they’re due. Amid concerning reports about the scope of RBS’ £400m compensation scheme for those affected, it’s encouraging to hear that we will receive quarterly updates on how the redress process is progressing.
“It’s also good to see the FCA once again discussing plans to expand the remit of the Financial Ombudsman. Whether it’s through a beefed-up ombudsman, or an additional route to dispute resolution, we need to see the redress gap addressed. A decade is too long to wait for justice. We should be putting the victims first. That starts with equipping them with the information they need to achieve compensation.”
Lawrence Tomlinson, the Yorkshire-based former Government adviser, who compiled a dossier which contained scathing criticisms of the way RBS treated some of its small business clients. added: “Banks do not treat their customers inappropriately, bankers do.
He added: “For too long, shareholders have paid the price for the misconduct of individuals within banks who face no penalty and continue to make terrible decisions for the bank, their customers and UK economy alike. It’s time for that to stop.”
Mr Tomlinson has also called for the full FCA report into GRG to be published,
Ross McEwan, the CEO of RBS said: “I am pleased that the regulator has confirmed the findings from last November and that the most serious allegations made against the bank have not been upheld.
“We have acknowledged for some time that mistakes were made and have apologised that we did not always provide the level of service and understanding we should have done for these customers in the aftermath of the financial crisis.
“The regulator has again confirmed that the remediation steps we announced in November to address concerns for customers are appropriate. Any customer who feels they were treated inappropriately whilst in GRG should make use of the complaints process. The culture, structure and way RBS operates today have all changed fundamentally since the period under review.
“We have made significant changes to deal with the issues of the past, so that the bank can better support SME customers in financial difficulty whilst also protecting the bank’s capital.”