Bank squeezed SMEs in wake of financial crisis
RBS mistreated a significant number of its SME customers, including retailers, in the years following the 2008 financial crisis, a Financial Conduct Authority (FCA) report has revealed.
The damning report covers the activities of the bank’s Global Restructuring Group (GRG), the wing of RBS tasked with turning around struggling SMEs, but which the FCA found had an “undue focus” on hiking prices and debt reduction.
Covering a period from 2008-2013, the report found the treatment of RBS customers at this time was “often insensitive, dismissive and sometimes unduly aggressive”.
During the reporting period GRG had 5,900 SME businesses on its book, 341 of which were from the retail sector. The report found that the treatment of one in six of GRG’s SME customers was “likely to have caused material financial distress”.
Case studies drawn from a representative sample of customers show GRG staff engaged in various bad practices, with failings not limited to rogue individuals.
The report claims: “This treatment did not stem simply from idiosyncratic behaviour on the part of GRG staff and managers. Rather, it resulted from a failure on the part of GRG and RBS to fully recognise and manage the conflicts of interest inherent in GRG’s twin commercial and turnaround objectives.”
The FCA report is packed with examples of GRG staff taking a cavalier approach to customer wellbeing.
One document titled ‘Just Hit Budget’ – which lists 16 ways to earn fee income from customers – was distributed among staff and at training sessions.
Tips included in Just Hit Budget include: “Rope: Sometimes you need to let customers hang themselves” and “Use facility letters: If they sign, they can’t complain”. The use of such materials was never challenged at a senior level, according to the report.
Recommendations for the future made by the FCA in the report include the regulator working with government to improve protections for “less sophisticated” SMEs including family businesses and sole traders, and developing a new code of conduct for banks working with SMEs.
Responding to the publication of the FCA report, RBS CEO Ross McEwan said: “We have acknowledged for some time that mistakes were made and have apologised that we did not always provide the level of service and understanding we should have done for these customers in the aftermath of the financial crisis.”
• If you’ve had a poor GRG experience you’d like to share, contact firstname.lastname@example.org