Royal Bank of Scotland is being forced to justify if the £400m it has set aside to compensate small business customers will be large enough to meet the claims from those who argue they have been mistreated by the bailed-out bank, The Guardian reports.
Andrew Tyrie, the Conservative MP who chairs the Treasury select committee, has asked the 73% taxpayer-owned bank if the £400m is an underestimation of the cost of compensating customers of its defunct global restructuring group (GRG).
In a letter to the RBS chief executive, Ross McEwan, Tyrie said campaigners had asked for the bank to pay out £2bn in compensation.
Tyrie wrote to McEwan – and Andrew Bailey, chief executive of the Financial Conduct Authority – after last month’s move by RBS to apologise to small business customers and pledge to issue them with refunds of fees and allow them to make fresh complaints about their treatment between 2008 and 2013.
At the time RBS said it expected to spend £400m on the process, which has followed three years of campaigning by customers. The issue with GRG first surfaced in 2013 when Lawrence Tomlinson, a businessman, compiled a dossier alleging the bank deliberately wrecked small businesses to make profits.
Tyrie set out a series of questions for McEwan which included providing details of the timescale for the payouts and information about whether firms which went into liquidation would receive payments.
The MP also asked Bailey when the regulator would publish its findings into GRG. The report – known as a section 166 report – is long delayed and may not be published in full until the individuals mentioned have been able to review it, in a process known as “Maxwellisation”.
In his letter to Bailey (pdf), Tyrie also asked for the Treasury select committee to receive the agreement between RBS and the FCA about the redress scheme. “This should include any application made by RBS to the FCA for approval of the new review complaints procedure,” the letter said.
As he published his correspondence, Tyrie said: “More detail on the design of the scheme is needed. This could give affected businesses more confidence that they will obtain reasonable compensation. The regulator should publish its full report into GRG as soon as possible.”
Both RBS and the FCA said they would respond to Tyrie in due course. RBS shares closed up almost 6% at 209p – still below the 502p average price taxpayers paid for the stake during 2008 and 2009.