As RBS make the welcome announcement that complex fees paid by SME victims of the GRG (Global Restructuring Group) scandal will be automatically refunded, the FSB feels the bank has further to go – both to atone for its wrongdoing and to regain small business trust.
FCA Approval
With FCA approval, RBS announced two measures ‘designed to address the bank’s failings’ towards ‘those SMEs in the UK and ROI that were customers in GRG during the period between 2008 –
2013’:
- A New Complaints Process for those customers, overseen by retired High Court Judge, Sir William Blackburne, who will provide a third party overview ‘should SME customers who were in GRG wish to complain about their treatment or challenge the bank’s decision on a previous complaint.’
- ‘An Automatic Refund of Complex Fees paid by SMEs in the UK and ROI that were customers in GRG during the relevant period’, which will speed up refunds and ‘demonstrate our commitment to addressing issues of the past.’
The bank estimates the costs associated with the new complaints review process and automatic refunds to be approximately £400m (including operational costs), to be provided in Q4 2016.
Admitting Their Failures
RBS also responded to the FCA’s update on its review into the treatment of SME customers in the bank’s former GRG between 2008 and 2013 and its summary of the Promontory Financial Group report.
The bank acknowledged that ‘it could have done better for SME customers in GRG,’ particularly regarding the transition to GRG and explanation of changes to the prices or complex fees it was charging. It also acknowledged communication failures and poor handling of customer complaints.
However, the FCA’s update confirms that in a significant majority of cases, it was likely that RBS’s actions did not result in material financial distress to these customers, and RBS said it continues to cooperate fully with the FCA and learn lessons from its ongoing review.
Ross McEwan, CEO of RBS 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.
“Although the FCA review into the historical operation of GRG continues, we believe that now is the right time to deal with the areas where we accept some customers were let down in the past.
“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.”
‘Small Businesses Affected Deserve An Apology .’
However, the FSB, who have been contacted by the RBS about its new measures, feels that RBS have further to go to right past wrongs and ensure they are worthy of the trust of SMEs in future.
Mike Cherry, National Chairman at the Federation of Small Businesses 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.
“We have now been contacted by RBS about their plan, which we will study. While we welcome any moves to recompense businesses, RBS still has considerable work to do if it’s to regain the trust of the small business community.
“In addition to delivering on the proposed compensation scheme, reversing its recent decision to its terms and conditions to allow them to charge their small business customers for depositing money into accounts would be a good start. In the longer term, FSB will also be engaging with the FCA to see what independent action it will be taking to ensure this sort of mistreatment of small business customers does not happen again.”