Firms appointed to investigate treatment of struggling SMEs by RBS

Friday 17 January 2014 10.26
RBS has been accused of pushing struggling firms into its 'turnaround' unit
RBS has been accused of pushing struggling firms into its 'turnaround' unit

Britain's financial regulator has appointed two outside firms to review part-nationalised Royal Bank of Scotland's treatment of struggling small business customers.

RBS, which is 82% owned by the British government, has been accused by government adviser Lawrence Tomlinson of pushing struggling small firms into its Global Restructuring Group “turnaround" unit.

Mr Tomlinson claimed that the bank could charge businesses higher fees and interest once they were in this unit, and take control of their assets.

RBS Group is the parent company of Ulster Bank.

The country’s Financial Conduct Authority has said that consultancy Promontory Financial Group and Mazars, an accounting firm, will conduct the independent review which will be paid for by the bank.

The review will consider allegations of poor practice set out in two reports, and publish its findings in the third quarter.

"The review will also consider whether any poor practices identified are widespread and systematic. If this is the case, the second stage of the review will identify the root cause of these issues and make recommendations to address any shortcomings identified," the FCA said in a statement.

Jon Pain, head of conduct and regulatory affairs at RBS, said that in addition to the FCA's review the bank has commissioned law firm Clifford Chance to further investigate loans to business customers.

"Any customer with concerns about their experience with GRG can contact Clifford Chance to have their case examined," Mr Pain said.

The FCA said that while commercial lending is not a regulated activity, if the findings reveal issues which come within the FCA's remit it will consider further regulatory measures.