Royal Bank of Scotland Group Plc may have disqualified thousands of small businesses that had allegedly been mistreated by the lender's now-defunct Global Restructuring Group, or GRG, from receiving compensation, the Financial Times reported Oct. 16.
In November 2016, RBS set aside £400 million for a redress fund, as it admitted it could have done better for the small and medium-sized businesses in GRG. However, the lender's definition of customers who should be included in the compensation scheme differs from an important element of the U.K. Financial Conduct Authority's definition, according to the FT.
The bank estimates that about 8,000 small-business owners will be disqualified from the redress fund, as they were never part of GRG, while another 4,500 customers were allowed into the scheme, as they had a credit line managed by another GRG-related unit.
RBS CEO Ross McEwan told The Sunday Times there was "absolutely no evidence" that the lender had "deliberately destroyed businesses for their assets" and if the public were not happy with the bank's procedures, it would be happy to fight them in court.
Earlier, U.K. Treasury Select Committee Chair Nicky Morgan said the committee had instructed specialist adviser Andrew Green to make sure that the FCA's pending report summary on RBS' restructuring unit reflected its findings. Morgan warned that should the regulator decline the proposal or if Green could not provide assurances, the committee could force the FCA to publish the entire report, according to another FT report. The FCA previously rejected to fully disclose the report.
The 361-page report termed "Section 166" was leaked to the BBC, indicating that about 92% of small businesses that had been placed under GRG experienced "inappropriate action" by the division, including raising interest charges or adding unnecessary fees.