As U.K. federal financial investigators continue their probe into the Royal Bank of Scotland’s small business banking practices, new reports say the financial institution is launching an inquiry of its own into the matter.
Unnamed sources said RBS has hired third-party advisers to examine the bank’s treatment of small business clients as it continues its internal investigation of the matter, Business Recorder reports said Thursday (July 23).
The U.K.’s Financial Conduct Authority (FCA) has been probing RBS for nearly a year following claims that the bank mistreated its small business customers, squeezing them out into its Global Restructuring Group division in order to charge them higher interest and other fees. According to senior executives at the firm, the claims have been some of the most damaging to RBS’ reputation.
The decision to hire outside help with its investigation was for the purpose of identifying potential inconsistencies with the probe taken on by the FCA, the unnamed source said. “It’s to provide the board with confidence RBS is getting to the bottom of this.”
Allegations had hit RBS last May that the bank forced its small business loan borrowers to default to reduce RBS’ exposure and lessen regulatory burdens placed on the institution for lending to small businesses in the first place. U.K. newspaper The Times published the claims in an article following its own investigation of the matter, concluding that RBS “piles on fees, revalues property that loans are secured against, triggers defaults and takes over assets” when dealing with small business borrowers through its Global Restructuring Group.
“Squeezing thousands of business customers who might have thrived had they been given the support they were promised appears to be an unintended consequence of the desire to make banks safer,” the report concluded.
RBS, in which the government holds a 78 percent stake, is also under watch by the Serious Fraud Office for its handling of small business customers.