Royal Bank of Scotland (RBS) is to put aside £400 million to help compensate as many as 4,000 small and medium-sized businesses following allegations that they were mistreated by the bank’s Global Restructuring Group (GRG) after the financial crisis.
The lender said over £300m will go for the “automatic refund of complex fees” paid by such firms between 2008 and 2013, while just under £100m will apply to operational costs of a new complaints process to handle related claims.
As many as 4,000 of the 12,000 customers transferred to the bank’s GRG unit during that period are believed to be eligible for compensation.
“I am very sorry that we did not provide the level of service and understanding we should have done,” said RBS CEO Ross McEwan.
In a statement RBS said: “Specifically, the bank could have managed the transition to GRG better and should have better explained to customers any changes to the prices or complex fees it was charging.”
The “complex fees” for which affected customers will be refunded include management and monitoring, risk, exit and asset sales fees, the Financial Conduct Authority (FCA) said.
The FCA, which helped develop plans for the compensation and new complaints process, said these were the “appropriate steps for RBS to take”.
Welcoming the announcement of the fund and the wider process, East Antrim MP Sammy Wilsonsaid there was more work to be done regarding the RBS-owned Ulster Bank.
“During my time as Finance Minister I regularly raised complaints by businesses who were put into financial difficulties even though they were meeting all the terms of their loan agreements,” he said.
“Their assets were then taken and put into the West Register [a specialist property asset management company wholly owned by Ulster Bank] which was basically Ulster Bank’s way of picking plum assets from customers for their own profit.
“In most cases customers were forced into paying greater fees, interest or had the terms of their loan changed deliberately putting them into difficulties which resulted in them going into administration.”
Ulster Bank, he said, must now “come clean” about the the number of businesses whose assets were seized, how many were sold within two years and what profit was made on them.
However, referring to the GRG unit the FCA said that while customers transferred to it were found to be “exhibiting clear signs of financial difficulty”, it stopped short of confirming earlier reports and allegations that the bank intentionally pushed businesses to failure in hopes of picking up their assets on the cheap.