The Royal Bank of Scotland has launched an independent inquiry into whether the bank treated customers fairly in tough times, following damning findings in an independent report commissioned by the government.
Sir Andrew Large, former deputy governor of the Bank of England, was commissioned by Vince Cable, secretary of state for business, innovation and skills, to write an independent report into RBS’s lending to SMEs. It is claimed the report found RBS was deliberately wrecking viable small businesses to make profits for the bailed out bank.
In a letter to Sir Andrew, RBS group chief executive Ross McEwan said the bank will be acting upon the report’s findings that some customers were angry about the treatment they received during tough times.
He said: “To ensure our customers can have full confidence in our commitment to them I have asked the law firm, Clifford Chance, to conduct an inquiry into this matter, reporting back to me in the new year. It is important that we get this right, especially as our regulators want the bank to remove problem loans more quickly.”
While Mr McEwan praised the “balanced” independent report, he acknowledged that RBS has “overcorrected” for the reckless lending practices that “broke” RBS bank five years ago and “in many cases the pendulum of risk aversion has swung too hard to one side.”
Mr McEwan said: “As you have identified there are loans that we could, and should be making, but are not. You have shown that in many cases we are too complicated and too slow to react to the needs of our customers.
“We recognise that the bar is set higher for RBS than any other bank, because we were rescued at the public expense. We have an obligation to do more than any other to support the British recovery.
“That is why we accept the recommendations you have set out. We will do this as part of the full review into our ongoing businesses that I have launched. The review will ensure that the bank places the needs of our customers at its centre.
“Reporting back in February, the review will fully and transparently address the issues that you have raised in your report and I am pleased that Oliver Wyman will continue to work with the bank to help deliver on this.”
Mr McEwan said that RBS now recognises that there are steps it can take to grow gross lending, including writing to thousands more businesses setting out how much more the bank is willing to lend them.
He said: “We have already offered £4bn this way - this will now increase to £10bn.”
