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RBS sets aside £400m ahead of SME fee refunds




RBS has launched a new complaints process that will automatically refund complex fees paid by SME customers who were transferred to the bank's former Global Restructuring Group (GRG).

The bank has launched the process with the agreement of the Financial Conduct Authority (FCA) after it reviewed the treatment of RBS SME customers impacted by GRG between 2008 and 2013.

The new complaints process will be overseen by retired High Court judge William Blackburne. 

Last month, RBS admitted that it had let some of its SME customers down in the aftermath of the financial crisis.

The report from the FCA found that SME customers transferred to GRG were showing clear signs of financial difficulty after highlighting isolated examples of poor practices from RBS.

The FCA also found that RBS failed to support SME businesses in a manner consistent with good turnaround practice and failed to document or explain the rationale behind decisions relating to pricing following transfer to GRG.

RBS expects that the costs associated with the new complaints review process and automatic refund of fees to be around £400m, which will be provided in Q4 2016.

The bank admitted that the 2008-2013 period was a very difficult period for RBS and said it lost more than £2bn from lending to SME customers.

Ross McEwan, CEO of RBS, said it had acknowledged that mistakes had been made.

“Some of our customers went through what was a traumatic and painful experience as a result of the crisis. 

“I am very sorry that we did not provide the level of service and understanding we should have done.”

Ross said he was pleased with the agreement with the FCA, although the regulator will be assessing what further work may be needed given the findings in the report.

“The culture, structure and way RBS operates today is fundamentally different from the period under review,” Ross added. 

“We have made significant changes to deal with the issues of the past, so that the bank can better support SME customers in financial difficulty, while also protecting the bank’s capital.”

What is a complex fee? 

‘Complex fees’ include management/monitoring fees, ratcheted fees, late management information fees, mezzanine fees, risk fees and exit fees as well as asset sales fees.

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