RBS to pay £400 million after small business scandal
Staff Writer |
Royal Bank of Scotland (RBS) has agreed to refund around £400m of fees to smaller business customers hit by failings at bank's former Global Restructuring Group subsidiary, while also launching a new complaints process to be overseen by a retired High Court judge.
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Approved by the Financial Conduct Authority, the complaints process has been designed to address the bank's improper treatment of roughly 12,000 SME customers by GRG from 2008 to 2013 and will be overseen by an independent third party, Sir William Blackburne.
There will be an automatic refund of complex fees paid by SMEs in the UK and Ireland that were customers in GRG during the period and a new complaints process, which together will cost the bank about £00m.
During the financial crisis in 2008, the number of SMEs which were shifted under the auspices of the restructuring arm rose by about 400%, and the bank said it lost over £2bn from lending to SMEs.
CEO Ross McEwan said the bank has "acknowledged for some time that mistakes were made" and was sorry that it "did not provide the level of service and understanding we should have done".
The bank said it could have managed the transition to GRG better, explained to customers any changes to prices or complex fees and "accepts that it did not always communicate as well or as clearly as it should have done".
The FCA has confirmed that no evidence was found that RBS "artificially engineered a position to cause or facilitate the transfer of a customer to GRG or identified customers for transfer for inappropriate reasons and that all SME customers transferred to GRG were exhibiting clear signs of financial difficulty".
The watchdog's report on GRG found that "some elements of this inappropriate treatment of customers should also be considered systematic as it resulted from a failure on the part of RBS to fully recognise and manage the conflicts of interest inherent in GRG's twin commercial and turnaround objectives and to put in place the appropriate governance and oversight procedures to ensure that a reasonable balance was struck between the interests of RBS and SME customers". ■