RBS to Compensate SME Customers

Britain’s financial watchdog on Tuesday said Royal Bank of Scotland was guilty of “systematic” mistreatment of distressed small businesses that came to it for help, but cleared the bank of the most serious allegation that RBS forced businesses into default for its own benefit.

RBS announced alongside the report’s findings that it will automatically refund complex management fees worth £400 million ($497 million) to small and medium-sized enterprises that went through its controversial restructuring process, Business Insider reported.

CEO Ross McEwan says the bank is “very sorry” for what happened to businesses that went through RBS’ restructuring arm between 2008 and 2013, and insists that: “The culture, structure and way RBS operates today is fundamentally different from the period under review.”

The FCA has been investigating allegations of wrongdoing at its Global Restructuring Group since 2014. RBS’s GRG was accused of artificially engineering small businesses into default on their debts so that the bank could extract cash from them.

The allegations date back to 2013 but were recently resurrected when documents were leaked to Buzzfeed and the BBC. The publications claimed that “staff was asked to search for companies that could be restructured, or have their interest rates bumped up,” in a project known as “Dash for Cash.”

The Financial Conduct Authority announced on Tuesday that it has concluded RBS “did not set out to artificially engineer” SMEs to fall into the GRG and “there was not a widespread practice of identifying customers for transfer for inappropriate reasons, such as their potential value to GRG.”