Royal Bank of Scotland: Small Businesses
Debate between Lord Young of Cookham and Viscount Hanworth
Viscount Hanworth
To ask Her Majesty’s Government whether they intend to press the Financial Conduct Authority to publish the report, commissioned by the then Secretary of State for Business, Innovation and Skills at the end of 2013, concerning the treatment by the Royal Bank of Scotland of small businesses supposedly in financial distress.
Lord Young of Cookham (Con)
My Lords, the Financial Conduct Authority is an independent body. On 8 November it published a summary of the main findings from the Skilled Persons Review into the Royal Bank of Scotland’s treatment of customers in financial difficulty. The FCA announced that it is carefully considering the report and other additional materials. It is currently assessing what further work may be needed and will publish a full account of its findings when practicable.
Viscount Hanworth (Lab)
I thank the Minister for that Answer. At long last there has been a partial admission by RBS of its wrongdoing, for which the evidence is well documented and incontrovertible. The bank has been endeavouring to improve its financial situation by withdrawing its loans from small businesses that have consequently been driven into bankruptcy. Thereafter, the property department of the bank has been able to acquire the assets of the companies at fire sale prices and sell them on at a profit. The compensation that has been mooted by the bank falls far short of the damage that has been inflicted. Only a small minority of the companies that have survived this treatment can claim compensation. How can a Government who profess to be working in the interests of small businesses tolerate such an abuse on the part of a bank that is in public ownership?
Lord Young of Cookham
The report to which the noble Viscount refers is indeed a worrying one for RBS. While the review did not find evidence to support the most serious allegations made against the bank, it is critical of some of its actions—for example, the failure to support SMEs in a manner consistent with good turnaround practice and, to pick up on a point made by the noble Viscount, the failure to handle conflicts of interest inherent in the West Register model and operation.
As for the compensation scheme, small businesses that came within the global restructuring group between 2008 and 2013 are eligible for compensation under the scheme. Complex fees will be repaid automatically and then, if people make complaints and are not happy with RBS’s response, they can appeal to the independent third party announced yesterday.
The FCA has a responsibility towards customers and businesses. It has been involved in the construction of the complaints system and has taken into account representations made on behalf of customers. However, it is continuing to consider whether further action is needed, and I know that it will take on board the points that the noble Viscount has just made.