Nearly 500 small businesses have come forward to complain about their treatment by banks following claims the Royal Bank of Scotland may have deliberately forced companies out of business.
All major banks are facing a review of small business lending after allegations of “unscrupulous” practices at the state-backed RBS
The Financial Conduct Authority (FCA) is investigating the treatment of firms after an explosive report by businessman Lawrence Tomlinson.
Mr Tomlinson’s report – published in November – focused on the Global Restructuring Group (GRG) within RBS, which handles loans classed as risky and is understood to have the power to scrap loan deals, impose inflated interest rates and charge hefty penalties.
The report alleged that firms not necessarily in immediate financial distress are “engineered” into GRG, sometimes through small technical breaches of loan terms, such as late filing of minor information.
They are then hit with exorbitant rates and fees, which in some cases cause them to collapse, allowing RBS to buy their property and assets on the cheap for the benefit of its West Register property arm, according to Mr Tomlinson, who is one of Business Secretary Vince Cable’s key advisers.
Mr Tomlinson said yesterday that in the weeks since his report came out, 450 more businesses have made allegations
The Financial Conduct Authority and the Prudential Regulation Authority are investigating about 200 earlier complaints, which formed the basis of his original inquiry, commissioned by Mr Cable’s business department.
Mr Tomlinson is also helping the RBS chief executive, Ross McEwan, with the bank’s own inquiry into the allegations, which is being led by London law firm Clifford Chance.
Mr McEwan said he has yet to see evidence that the bank had deliberately forced firms under.
“Serious allegations have been made about how some of these customers were treated by the bank,” he said.
“It is important to note that the most serious allegation that has been made is that RBS conducted a ‘systematic’ effort to profit on the back of our customers when they were in financial distress.
“We do not believe that this is the case. No evidence has been provided for that allegation to the bank. The review will investigate the claim fully and I will report back on its findings.
“It is vital that we enjoy the trust of our customers and I cannot allow these allegations to undermine that trust.”