RBS to compensate thousands of small business customers
RBS has confirmed it will set aside a total of £400m – £100m to cover the costs of a new complaints review process and £300m for the automatic refund of fees charged to SMEs facing financial difficulty between 2008 and 2013.
Around 12,000 SMEs were transferred to RBS’s Global Restructuring Group (GRG) because of issues such as missed loan payments or breaching the terms of a loan. Some 4,000 will be eligible to receive compensation.
GRG no longer exists, but at the time its role was to protect the bank’s capital and to help turn SMEs around.
In January 2014, the city regulator, the Financial Conduct Authority (FCA), commissioned a review into RBS’s treatment of SME customers transferred to GRG between 2008-2013.
The report found inappropriate treatment of SME customers such as poor and misleading communication, placing an undue focus on pricing increases and debt reduction, failure to document or explain the rationale behind decisions and the failure to identify customer complaints and to handle them fairly.
‘Mistakes were made’
RBS confirmed the redress package and announced it will launch a new complaints review process, overseen by retired high court judge, Sir William Blackburne.
The 4,000 SMEs will receive an automatic refund of fees paid during the time they were customers of GRG.
Ross McEwan, chief executive 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.
“Although the FCA review into the historical operation of GRG continues, we believe that now is the right time to deal with the areas where we accept some customers were let down in the past. I am pleased that with the agreement of the FCA, we are able to announce a new complaints process overseen by Sir William Blackburne, alongside an automatic refund of complex fees paid by SME customers who were in GRG between 2008 – 2013.”
McEwan said the culture, structure and way RBS operates today is “fundamentally different from the period under review”.
He said: “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.”