RBS faces investigation into claims of hurting small businesses

25th Nov 2013 09:03

Royal Bank of Scotland (RBS) has been accused of putting good and viable small businesses into default so the lender could make more profit. Business Secretary Vince Cable has sent the report, about how RBS dealt with the businesses, to the Financial Conduct Authority and the Prudential Regulation Authority. The report, which centres on the bank's Global Restructuring Group (GRG) lending division, was compiled by government adviser Lawrence Tomlinson, who acted independently. "Some of these allegations are very serious and I am waiting for an urgent response as to what actions have been taken," Cable said.The report claims that firms that were not necessarily in immediate financial distress were put into the GRG in order to generate revenue for the bank through fees, increased profit margins and the purchase of devalued assets by their property division, West Register.In conducting the report Tomlinson did not set out to solely look into RBS."I feel really sick sometimes. It is really disturbing," he said."It is ruining people's businesses for sure, and in some cases having a huge impact on their personal lives too, even leading to family breakdown."The report also alleges that estate agency businesses were put into administration after so-called "desktop" valuations of their assets that did not involve any visits to their properties.RBS responded to the claims in a statement: "In the boom years leading up to the financial crisis, the over-heated property development market became a major threat to the UK economy."RBS did more than its fair share to fuel this and commercial property lending was one of the key drivers of our near collapse as valuations rapidly plummeted."Facing up to these mistakes has been a difficult, but essential part of making RBS a safe and strong bank once again."Shares in RBS rose 0.48% to 09:44 on Monday. RD