Royal Bank of Scotland has hired Clifford Chance to review allegations that it forced viable businesses into distress.
Government adviser Lawrence Tomlinson had said RBS and Lloyds should be split up to protect viable business from bankruptcy. In a report, he said small firms were being pushed into the hands of RBS’s Global Restructuring Group to generate fees and fuel the purchases of devalued assets for profit.
RBS chief executive Ross McEwan conceded that some customers in distress had been “angry about the treatment they received”, adding that he had asked Clifford Chance to conduct an inquiry to “ensure our customers can have full confidence in our commitment to them”. The law firm will report back in the new year.
George Osborne called Tomlinson’s report about RBS “shocking”, adding in an interview with ITV today: “We are actively trying to seek out these problems; we are not trying to brush them under the carpet.”
Tomlinson said Lloyds and RBS were not just too big to fail but were now “too big to regulate”, accounting for 60 per cent of lending to small and medium-sized businesses.
“Ultimately the best safeguard would be a more competitive banking market in which customers can vote with their feet,” he said in the report.
He wants six solely retail and commercial banks to be created from Lloyds and RBS, each with a 10 per cent market share.
John Allan, National Chairman, Federation of Small Businesses, said: ”If these allegations are true then this is concerning for small businesses. A continued economic recovery needs small businesses to succeed.”
Andrew Spicer, professor of organisational behaviour at the Cass Business School, said RBS needs “a culture which encourages of an ethic of care towards clients”.