Finance · 5 December 2017

RBS staff were offered bonuses to exploit small firms, according to leaked report

It is alleged RBS staff were encouraged to target vulnerable business owners
It is alleged RBS staff were encouraged to target vulnerable business owners

Management at the Royal Bank of Scotland (RBS) failed to address known failings in the turnaround division at the centre of an investigation, according to a leaked report seen by the press.

The Financial Conduct Authority (FCA), the city watchdog now undertaking a second inquest into claims RBS’ Global Restructuring Group (GRG) deliberately pushed small firms into disrepair, has so far unpublished its initial report in full.

However, an early leak to the BBC suggested “inappropriate action” – such as interest rates being raised and dubious fees – was encountered by 92 per cent of all businesses working with the GRG.

Now, a leaked copy of the full report, seen by the Daily Mail, has revealed RBS staff were pressured to mislead small business owners inside the GRG, and were offered financial incentives to deliver misinformation.

The FCA cited evidence of training material issued to GRG staff advising them to target “basket cases”. It is claimed the manual instructed staff to “let customers hang themselves”, and “missed opportunities mean missed bonuses”.

RBS has said the manual was an isolated incident.

According to the Daily Mail, staff were also encouraged to extract “arbtitrary and complex” fees without explanation. The leaked report outlined nine major failings by RBS to address the practices, and claimed management “were aware, or should have been aware” of the level of exploitation.

Around 140 firms are seeking damages from RBS, with the average claim against the bank reported to sit between £6m and £7m, totally £1bn overall.

Responding to the latest leak, LexLaw’s Ali Akram, a firm representing a number of the claimants, called for full publication of the report.

“It is in the public interest for this document to be fully published, and such publication is likely to assist the companies and family businesses that were victims of GRG in deciding on litigation against RBS,” he said.

The regulator itself came under pressure by the Treasury select committee of MPs to publish the report in full, after earlier summaries indicated greater damage than previously known.

According to board meeting minutes seen by The Times, the FCA concluded that publication would provoke the ““unacceptable risk of successful legal action by current/former RBS managers”.

Criticising the watchdog’s position, Kevin Hollinrake, Conservative Party MP and vice-chairman of the parliamentary group on fair business banking, said: “It is almost beyond belief that the regulator is living in fear of the banks that they are supposed to be regulating.”

RBS has set aside a £400m fund to compensate affected business owners that it hopes will end the scandal.

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Bank branch closures

 

Small businesses sound alarm over latest wave of RBS bank branch closures

Fresh bank branch closures announced by RBS risk wiping out access to vital one-to-one financial support for Britain’s small firms, the Federation of Small Businesses has warned.

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ABOUT THE EXPERT

Simon Caldwell is a reporter for Business Advice. He has a BA in politics and communications from the University of Liverpool, and previously worked as a content editor in the ecommerce industry.

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