FCA launches probe into RBS lending claims

RBS: Has pledged to compensate customers affected by IT glitch. Picture: Getty
RBS: Has pledged to compensate customers affected by IT glitch. Picture: Getty
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Royal Bank of Scotland is facing a review of its treatment of small firms by an investigator appointed by the City watchdog, which has ordered other banks to examine their lending practices.

The Financial Conduct Authority (FCA) said its probe follows a report by Business Secretary Vince Cable’s adviser Lawrence Tomlinson, who alleged RBS forced small firms into financial distress to buy back their assets at rock-bottom prices.

Clive Adamson, director of supervision at the FCA, said an “independent skilled person” will be appointed to examine the claims against the state-backed lender, which Bank of England governor Mark Carney has described as “deeply troubling”.

Adamson said: “These allegations, if proved, raise serious concerns about how banks treat their customers. We expect all firms to act with integrity and put customers at the heart of their business.”

In his letter to other banks, believed to include Barclays, HSBC and Lloyds, he said commercial lending was not regulated by the Financial Services & Markets Act, but they should “satisfy yourself that your group does not engage in any of the poor practices alleged”.

A spokesman for RBS, which has hired law firm Clifford Chance to look into the claims, said the state-backed lender welcomed the FCA’s inquiry, but added: “As of now, no evidence has been produced that backs the claims of systemic fraud”.

Ross McEwan, the bank’s chief executive, admitted earlier this week that the allegations have done “serious damage” to its reputation.