Financial News

  • 20 April 2014, 2:55

RBS 'Cleared' Of Ill-Treating Small Firms

A review ordered by the Royal Bank of Scotland has cleared the lender of fraud against small and medium-sized business customers.

The bank commissioned an independent review by law firm Clifford Chance over claims RBS systematically set out to defraud its business customers.

It was launched following an allegation made by Lawrence Tomlinson in his report that the bank's global restructuring group (GRG) targeted small companies that were in financial difficulties.

Clifford Chance concluded there was no evidence to support the claim, which the bank described as a "damaging and serious allegation".

In compiling its report, Clifford Chance interviewed 138 small business customers in the recovery unit, 45 employees and reviewed 130 files.

This involved examining 400,000 pages and 1,200 documents.

RBS CEO Ross McEwan said: "The trust that a bank has with its customers is fundamental. That trust was put at risk at RBS by the allegation of systematic abuse made in the Tomlinson report.

"I welcome the Clifford Chance findings which show no evidence of the serious and damaging allegation that we had set out to deliberately defraud our business customers."

RBS said it would now ensure it can further enhance support for small and medium-sized enterprises (SMEs) when they get into financial trouble.

It also set out further steps to rebuild trust with its customers, building on changes made in response to the findings from the separate Sir Andrew Large review.

The City regulator is still conducting its own inquiry into actions of the bank's GRG division.

RBS also said it will not charge default interest for the first 90 days when an SME customer defaults, effective until May 31, 2015.

It has also stopped what it describes as "other smaller fee practices", as it seeks to improve the "the experience for customers" when they first go into financial distress.