Nearly all of the senior staff at Royal Bank of Scotland’s new turnaround unit for small businesses also worked in the controversial division accused of widespread mistreatment of small businesses, it has been revealed.
The influential Treasury Select Committee said information provided by RBS showed 30 of the 32 current employees at senior manager grade or above within RBS Restructuring previously worked in its heavily criticised Global Restructuring Group (GRG).
It added that 136 of 182 – 75% – of total current RBS Restructuring employees previously worked in GRG.
Nicky Morgan, chairwoman of the Treasury Select Committee, has called for assurances from RBS that changes have not been a mere ‘rebranding’ (PA)
Nicky Morgan, chairwoman of the cross-party group of MPs, said the discovery suggested the overhauled turnaround division at the bank may have been a mere “rebranding exercise”.
She is now demanding that RBS provides details of how staff training and rewards have been changed to ensure the “toxic culture” within GRG has been stamped out.
The Committee has also flagged up worries over the “surprisingly low” compensation so far paid out to small businesses affected by GRG and has asked to be provided with quarterly updates from the bank.
The Committee said just £1 million has been paid out in direct loss claims, with current trends implying it will pay out under £5 million in direct loss claims in total – far less than the £280 million set aside by the bank for GRG complaints.
Ms Morgan said: “Mr McEwan (RBS chief executive Ross McEwan) has assured the Committee that the culture at RBS Restructuring is fundamentally different from that of GRG.
“The discovery that almost all the senior management in the new unit previously worked at GRG raises concerns that there has merely been a rebranding exercise.”
On the payouts, she added: “To provide confidence that fair and reasonable compensation is being provided, decisions on consequential loss must be subject to independent oversight.
“RBS shouldn’t be marking its own homework.”
It comes after the Committee last week used its parliamentary privilege to publish findings of a report into the bank’s mistreatment of small businesses.
The Treasury Select Committee (TSC) branded the findings “disgraceful” and said there had been “overwhelming public interest” in making the GRG report public after it was widely leaked online and through social media.
Andrew Bailey, head of the Financial Conduct Authority (FCA), had failed to publish the report due to legal concerns despite demands from the Committee.
RBS has been dogged by allegations that GRG intentionally pushed small businesses towards failure in the hope of picking up their assets on the cheap.
The report by Promontory Financial Group found there was “widespread inappropriate treatment of customers” inside the GRG unit.
However, it said there was no evidence that “defaults were engineered to transfer businesses to GRG simply to generate revenue for RBS through fees”.
Last Friday, the bank reported a bottom-line profit for the first time in a decade, posting a surplus of £752 million for 2017 – a major improvement on the £6.95 billion loss in 2016.
But it warned that a pending settlement with the US Department of Justice could hit 2018 results.