RBS earmarks £400m to refund small firms hit by GRG
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The state-backed group said the funds will go towards both an “automatic refund of complex fees” paid by such firms between 2008 and 2013, as well as the operational costs of a new complaints process, overseen by retired High Court Judge Sir William Blackburne.
Edinburgh-based RBS said: “As the bank has acknowledged, in some areas, it could have done better for SME customers in GRG. Specifically, the bank 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.
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Hide Ad“The bank accepts that it did not always communicate as well or as clearly as it should have done. The bank also did not always handle customer complaints well.”
The “complex fees” for which affected customers will be refunded include management and monitoring, risk, exit and asset sales fees, the Financial Conduct Authority (FCA) said.
The watchdog, which helped develop plans for the compensation and new complaints process, said these were the “appropriate steps for RBS to take”.
The FCA said the bank’s “inappropriate treatment” of small business customers included poor and in some cases “misleading” communication, an undue focus on price increases and debt reduction without considering whether it helped businesses in the long term, a failure to handle customer complaints fairly, and a failure to document rationale behind pricing.
RBS pointed out that the period between 2008 and 2013 covered by the FCA review was a “very challenging time for the bank and its customers”. It said that 2008 saw an “unprecedented” increase in small firms falling into financial distress, with the number moving into GRG increasing by about 400 per cent, and the bank losing more than £2bn from lending to SME customers.
Chief executive Ross McEwan said: “We have acknowledged for some time that mistakes were made. Some of our customers went through what was a traumatic and painful experience as a result of the crisis. I am very sorry that we did not provide the level of service and understanding we should have done.
“The culture, structure and way RBS operates today is fundamentally different from the period under review. We have made significant changes to deal with the issues of the past, so that the bank can better support SME customers in financial difficulty whilst also protecting the bank’s capital.”