RBS to compensate small firms in GRG

Royal Bank of Scotland said on Tuesday that it will compensate up to 12,000 small business customers that were transferred to its former Global Restructuring Group (GRG).

The bank has set aside £400m for the automatic refund of complex fees and also established a new complaints process, overseen by retired High Court Judge.

This comes after documents confirmed that bank staff were given higher bonuses based on fees collected for “restructuring” business customers’ debts by cutting the size of their loans and getting cash or other assets from the customer, BBC News reported.

The Financial Conduct Authority (FCA) recently concluded that RBS did not “artificially engineer” the transfer of customers to GRG, and that those transferred to GRG were showing clear signs of financial difficulty.

However, RBS acknowledged that, in some areas, it could have done better for SME customers in GRG. In particular, the bank said that it 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.

In October, the taxpayer-owned bank told the BBC’s Newsnight: “RBS has been very clear that GRG’s role was to protect the bank’s position… In the aftermath of the financial crisis we did not always meet our own high standards and we let some of our SME customers down.

“Since that time, RBS has become a different bank and significant structural and cultural changes have been put in place, including how we deal with customers in financial distress.”

Responding to the announcement on Tuesday, the Federation of Small Businesses (FSB) called on RBS to apologise and to fully recompense small firms affected by GRG activities.

Mike Cherry, national chairman of the FSB, said: “We remain deeply concerned that thousands of small business owners the bank was entrusted to support did not receive help and many lost their livelihoods. Small businesses affected now deserve an apology from RBS.”

Cherry also urged the bank to reverse its recent decision to change its terms and conditions to allow small business customers to be charged for depositing money into accounts.