As the Royal Bank of Scotland seeks to draw a line under one of its longest-running customer service battles that the bank has faced in recent times, to reimburse fees to customers who claim they were mistreated by its small business restructuring unit, it is setting up a £400 million ($497 million) scheme.
Claims that the bank’s Global Restructuring Group deliberately pushed some companies into bankruptcy so it could pick up their assets more cheaply is being faced by it for quite some time and now the taxpayer-owned bank said on Tuesday that it would set aside the sum after years of defending itself against such claims.
While stopping short of claims they were deliberately pushed into administration, the bank had however admitted some wrongdoing over the way it handled small businesses.
"I am very sorry that we did not provide the level of service and understanding we should have done," RBS Chief Executive Ross McEwan said in a statement.
Specifically, RBS admitted that it should have explained any changes to management and sales charges more carefully and it could have managed the transfer of customers to the GRG unit better.
The bank will automatically refund the disputed fees to affected borrowers and is in the process of setting up a new complaints process.
It welcomed news of the complaints process and fee refund scheme, to be indepedently overseen by former High Court judge William Blackburne, Britain's Financial Conduct Authority said separately.
"While the FCA still needs to see further detail about how the scheme will operate, we believe that it is an important step for RBS to put in place an appropriate complaints review process which should provide certain SME customers with a route to make a formal complaint, should they wish to do so," the FCA said.
For RBS, striking at the heart of the bank's core strategy to become Britain's most trusted retail and business lender are the clashes with hundreds of former borrowers which have been among the most reputationally damaging to RBS since the financial crisis had also hit the bank in 2008-09.
McEwan admitted the bank had mistreated some customers, paving the way for Tuesday's fee refund scheme launch in the banks v even though the bank has previously vigorously contested these allegations over the years.
An appearance by Andrew Bailey, the FCA chief executive at the Treasury Select Committee later on Tuesday coincided with the RBS announcement.
Costly litigation that is linked to faults at GRG, which includes a possible class action from hundreds of businesses, could be helped to be avoided by the bank through the offering of fee refunds and the setting up a new complaints scheme.
The cost to the bank of settling claims from small firms could run into billions of pounds, the media has reported earlier.
(Source:www.cnbc.com)
Claims that the bank’s Global Restructuring Group deliberately pushed some companies into bankruptcy so it could pick up their assets more cheaply is being faced by it for quite some time and now the taxpayer-owned bank said on Tuesday that it would set aside the sum after years of defending itself against such claims.
While stopping short of claims they were deliberately pushed into administration, the bank had however admitted some wrongdoing over the way it handled small businesses.
"I am very sorry that we did not provide the level of service and understanding we should have done," RBS Chief Executive Ross McEwan said in a statement.
Specifically, RBS admitted that it should have explained any changes to management and sales charges more carefully and it could have managed the transfer of customers to the GRG unit better.
The bank will automatically refund the disputed fees to affected borrowers and is in the process of setting up a new complaints process.
It welcomed news of the complaints process and fee refund scheme, to be indepedently overseen by former High Court judge William Blackburne, Britain's Financial Conduct Authority said separately.
"While the FCA still needs to see further detail about how the scheme will operate, we believe that it is an important step for RBS to put in place an appropriate complaints review process which should provide certain SME customers with a route to make a formal complaint, should they wish to do so," the FCA said.
For RBS, striking at the heart of the bank's core strategy to become Britain's most trusted retail and business lender are the clashes with hundreds of former borrowers which have been among the most reputationally damaging to RBS since the financial crisis had also hit the bank in 2008-09.
McEwan admitted the bank had mistreated some customers, paving the way for Tuesday's fee refund scheme launch in the banks v even though the bank has previously vigorously contested these allegations over the years.
An appearance by Andrew Bailey, the FCA chief executive at the Treasury Select Committee later on Tuesday coincided with the RBS announcement.
Costly litigation that is linked to faults at GRG, which includes a possible class action from hundreds of businesses, could be helped to be avoided by the bank through the offering of fee refunds and the setting up a new complaints scheme.
The cost to the bank of settling claims from small firms could run into billions of pounds, the media has reported earlier.
(Source:www.cnbc.com)
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