£400m set to be repaid to business customers by RBS

HUNDREDS of millions of pounds are to be distributed to customers of the Royal Bank of Scotland’s Global Restructuring Group, the part of RBS which has come under huge criticism for the way it handled struggling SMEs.

£400m will be handed out to businesses which were transferred to the RBS Global Restructuring Group in an announcement made just before the bank is due to appear before a Treasury Select Committee.

RBS has been accused of mistreatment towards its customers between 2008-13 regarding the transfer of customers to GRG and its lack of communication on the complex fees it introduced.

The state-backed bank has now said that it will automatically refund these complex fees and has introduced a new complaints process led by retired High Court Judge Sir William Blackburne.

Today the FCA highlighted the bank’s “failure to support SME businesses in a manner consistent with good turnaround practice” and that its complaint handling was poor and communication misleading.

But the FCA has agreed to RBS’ most recent remediation attempts, and welcomed the introduction of an independent third party.

A long-awaited report commissioned by the FCA from January 2014 has found that “elements of this inappropriate treatment of customers should also be considered systematic.”

Yorkshire entrepreneur Lawrence Tomlinson was one of the first to uncover and condemn small business lending practices at the bank with the Tomlinson Report, which was published at the same time as a Sunday Times investigation into malpractice at the bank.

The subsequent Clifford Chance report found that although there was no systematic attempt to defraud customers, but that it was unclear how they calculated fees.

It follows a Buzzfeed and BBC Newsnight investigation which found internal documents urging GRG consultants to “provoke a default” if business customers were not already in default.

Ross McEwan, CEO of RBS said: “We have acknowledged for some time that mistakes were made. Some of our customers went through what was a traumatic and painful experience as a result of the crisis. I am very sorry that we did not provide the level of service and understanding we should have done.

“The culture, structure and way RBS operates today is fundamentally different from 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.”