Royal Bank of Scotland is putting aside almost £400m to compensate some of the small business owners that allegedly suffered at the hands of its controversial restructuring unit in the aftermath of the financial crisis.
As well as the automatic refund of fees paid by customers to GRG, RBS also launched a new complaints process to be overseen by retired judge Sir William Blackburne “should SME customers who were in GRG wish to complain about their treatment or challenge the bank’s decision on a previous complaint”.
The bank has previously admitted that GRG did get some things wrong, such as transparency on fees and apparent conflicts of interest. Many of GRG’s top managers have left and it has been folded into other parts of the bank.
The FCA, the UK’s financial regulator, welcomed Tuesday’s announcement from RBS and gave some initial findings of its report into GRG. It cleared RBS of the most serious allegations against it, including that it put healthy businesses into GRG and that it tried to profit from their distress. But it found several lapses in conduct by GRG, including poor communication, faulty processes and a “failure to support” small businesses.
“The report 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,” the FCA said.
The FCA has come under heavy pressure over the long delay in publishing its full report into GRG, particularly from parliament’s Treasury committee, which will grill Andrew Bailey, the head of the regulator, later on Tuesday
Last month, RBS said: “In the aftermath of the financial crisis, we did not always meet our own high standards and we let some of our SME customers down.”
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