Payouts for small f irms ‘driven to the wall’ by RBS
THOUSANDS of small business owners are finally set to get compensation over claims their firms were destroyed by RBS.
The bank will today admit mistakes were made by its infamous global restructuring group – an operation which was meant to be a crack rescue unit for struggling companies during the recession.
Small business owners claim the bank deliberately drove their companies to the wall to seize their assets and shore up its ailing balance sheet.
The taxpayer-backed lender will deny allegations it sought to profit from their suffering, but it will at last acknowledge that some company owners are entitled to a payout.
The decision – due to be announced this morning before markets open – is likely to be welcomed by entrepreneurs who saw their livelihoods, homes and marriages destroyed as their businesses went bust.
RBS chief executive Ross McEwan has already admitted that the bank, which owns Nat West, made mistakes. It follows years of criticism which were first met with a staunch defence from
‘Get to grips with problem’
the lender – even though as far back as 2009, City bankers were saying they would ‘take the keys’ of properties if they could not get their money back during the financial crisis.
RBS has faced a stream of allegations since then, culminating in a damning report by Government-backed entrepreneur Lawrence Tomlinson.
The review claimed that executives at many companies were ‘forced to stand by and watch an otherwise successful business be sunk by the decisions of the bank’.
This was hotly contested by RBS, which commissioned its own internal report that found no systematic wrongdoing.
The Financial Conduct Authority then ordered an independent report, which is expected in the coming months. It is expected to criticise RBS but clear it of the worst allegations.
Banking campaigners welcomed the compensation programme but warned the bank must offer redress proportionate to the damage caused.
Labour MP Wes Streeting, a member of the Treasury select committee, said: ‘It’s in the interest of customers, the bank and everyone else that we get to grips with the extent of the problem and what appropriate action needs to be taken.’
The decision to offer compensation followed explosive allegations last month. Leaked documents from 2008 described the restructuring work as a ‘dash for cash’ to help the bank’s ‘bottom line’.
RBS bosses said they had ‘seen nothing to support the allegation that the bank artificially distressed otherwise viable SME businesses or deliberately caused them to fail’.
But the bank has been facing a string of lawsuits from bosses who believe they suffered unjustly. A former chief executive of software firm Torex has filed a claim for £30million, while campaigners in the RBS GRG Action Group have demanded at least £2billion for 50 businesses affected.