RBS fined £28.6m for competition law breach

Part-nationalised Royal Bank of Scotland was today fined £28.6 million for breaking competition law after revealing details of its loan prices to rival Barclays.

The Office of Fair Trading (OFT) said RBS told Barclays the cost of its loans to large professional firms such as solicitors and accountants through a series of contacts between October 2007 and February or March 2008.

Ali Nikpay, the OFT's senior director of cartels and criminal enforcement, said: "Any company that discloses confidential future pricing information to its competitors risks a substantial penalty."

The breaches date back to the early stages of the credit crunch, when disgraced former boss Sir Fred Goodwin was still running RBS and banks across the board were tightening up lending terms.

But the fine for competition offences comes at a time when the banking sector already faces public anger for starving firms of credit in the recession while investment bankers continue to collect bumper payouts.

RBS, which is now 84% taxpayer-owned after a series of bailouts, had its fine reduced from an original £33.6 million by agreeing to co-operate with the OFT.

Barclays approached the OFT with details of the breaches in March 2008 and will avoid punishment as long as it continues to co-operate with the watchdog.

As well as general details of loan pricing, RBS also disclosed specific confidential details on the cost of two facilities it intended to offer.

The OFT added that it had "found evidence that the information was taken into account by Barclays in determining its own pricing".

Mr Nikpay added: "It is important that companies operating in the UK understand the seriousness of such conduct and ensure effective competition compliance throughout their organisation.

"This case underlines the OFT's commitment to protecting competition in the financial services sector."

An RBS spokesman said: "This is a deeply regrettable and isolated case from nearly two years ago, involving only two members of staff, one of whom has left the bank and one other who faces suspension and further investigation now the case has been settled.

"We have co-operated fully with the OFT throughout and have introduced stringent additional competition law training to ensure that this unacceptable behaviour does not happen again."