Inside the RBS Small Business Scandal
Last week, the Treasury Committee published a controversial report on the Royal Bank of Scotland’s treatment of small business customers during and after the 2008 financial crash.
Although the FCA began their investigations in 2014, they failed to publish their findings by the deadline of 16th February 2018, citing legal reasons – consequently, MPs on the Treasury Committee voted to use their parliamentary privilege to immediately release the full, unredacted report.
The document details how the bank’s Global Restructuring Group (GRG) failed to meet FCA standards and often addressed complaints in a dismissive manner, leading to the systemic mistreatment of SMEs and a widespread failure to act in their customers’ best interests.
The report finds that the overall culture of the company did not adhere to the FCA’s ‘Treating Customers Fairly’ principles, citing a combination of ‘poor management judgement’ and a ‘culture of deal making, with its focus on the financial interests of GRG’ as the source of RBS’s shortcomings.
In addition to these large-scale concerns, numerous offensive and inappropriate incidents are highlighted including an email which contained ‘mimicry’ that was ‘disrespectful of the customers’ nationality’.
Although RBS chiefs were quick to point out that some allegations made against them were proved false by the report, they did release a statement to reassure customers that they had taken the criticism on board; ‘The culture, structure and way RBS operates today have all changed fundamentally since the period under review and we have made significant changes to deal with the issues of the past, including how we treat customers in financial distress’.
Committee Chairwoman, Rt Hon Nicky Morgan MP, commented “The findings in the report are disgraceful. The overarching priority at all levels of GRG was not the health and strength of customers, but the generation of income for RBS, through made-up fees, high interest rates, and the acquisition of equity and property.”
A decade has now passed since the UK financial crash, yet the resulting scandals seem as frequent as ever. Whilst many SMEs have been unable to survive the ten turbulent years since the crash, many of those that did are frustrated by the recurrence of these issues; P2P investment platform Kuflink explained that ‘SMEs such as ourselves work extremely hard to adhere to both FCA regulations and our own company values, so it’s concerning to see that, once again, the actions of big banks like RBS are creating mistrust across the entire finance industry’.