The financial services regulator has appointed Promontory Financial Group and Mazars to conduct a review of the Royal Bank of Scotland’s (RBS) treatment of business customers in financial difficulty.
The Financial Conduct Authority (FCA) has called for the independent review in light of allegations of poor practice brought to light in Lawrence Tomlinson’s Banks’ Lending Practices report published in November 2013.
The first stage of the review, by regulatory compliance consulting firm Promontory and accountancy firm Mazars, will consider RBS’ treatment of a sample of small business customers which have been referred to its Global Restructuring Group (GRG).
It will include concerns raised by customers with Tomlinson, the Department of Business, Innovation and Skills, or the FCA.
Tomlinson’s report identified instances where the bank had engineered a business into default in order to move it out of local management and into GRG.
In his report, Tomlinson claimed by moving its business customers into GRG, RBS had generated revenue through fees, increased margins and ensured the purchase of devalued assets by its property division, West Register.
In a statement, the FCA said: “The review will also consider whether any poor practices identified are widespread and systematic.
“If this is the case, the second stage of the review will identify the root cause of these issues and make recommendations to address any shortcomings identified.”
The FCA has said it expects to publish the outcomes of the review in the third quarter of 2014 and has not ruled out taking further regulatory measures should the findings uncover issues which come under its remit.
RBS announced yesterday (16 January) it has instructed the law firm Clifford Chance to conduct an independent review of its own.
FCA chief executive Martin Wheatley will be the keynote speaker at this year’s Credit Summit, for details click here.