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FCA orders RBS past business review

SME allegations raise serious questions about how banks treat their customers, says FCA.

The FCA has ordered Royal Bank of Scotland to carry out a past business review following claims the bank put viable businesses into default so it could make more profit.

The regulator announced last week it has agreed with RBS that a section 166 report, or skilled persons report, should be carried out, and says it may take further regulatory action as a result.

FCA director of supervision Clive Adamson says: “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.”

Commercial lending is not a regulated activity under the Financial Services and Markets Act. But the FCA says the allegations gave it concerns as to whether RBS has treated customers appropriately, and may indicate wider concerns in relation to governance and culture at the bank. 

The FCA has also sent a letter to all other relevant banks seeking confirmation that they do not engage in any of the poor practices alleged in a report published last week.

The report contain claims which focus on a part of RBS called the Global Restructuring Group, which was set up to help struggling companies.

But firms have said GRG imposes fines, hikes interest rates and withdraws loans. They claim RBS’ property arm West Register then buys their properties at a fraction of their value.

Philip J Milton & Company managing director Philip Milton says: “These allegations raise wider questions about the treatment of businesses in financial distress, which all too often can be inappropriate and unfair.”

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