Royal Bank of Scotland: Small Businesses

Baroness Kramer Excerpts

Tuesday 15th November 2016 Lords Chamber

[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.

[Baroness Kramer (LD)]

My Lords, surely the Government could join with others in this House, including the noble Viscount, Lord Hanworth, in saying that those who were abused by this scheme should be fully compensated and that there should be a repayment not just of fees but for the damage done in businesses lost and far beyond that. That is a much bigger figure, which the FCA does not seem to have recognised in its report at this stage.

Would the Minister also back the whistleblowers? A number of RBS staff blew the whistle on the practices taking place. Virtually every one of them has found that their careers have ended; they have suffered extensively as individuals but, as far as I can tell from looking at the FCA report, not a word is said. We need whistleblowers and we need to treasure them.

[Lord Young of Cookham]

I endorse what the noble Baroness has just said about whistleblowers who put their careers at risk in order to bring malpractice into the public domain. It is not just the fees that are going to be compensated; direct losses will also be eligible for compensation, as will consequential losses where these are directly attributable to the actions of RBS. Established legal principles will be used to determine whether a consequential loss is factually and legally attributable to it. So it is not just the fees; it is direct losses as a result.