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Federation welcomes review of RBS action

THE Federation of Small Businesses has welcomed the Financial Conduct Authority's launch of an independent review into the scathing report by Lawrence Tomlinson into practices at Royal Bank of Scotland.

Dr Tomlinson's report for business secretary Vince Cable accused RBS of pushing struggling small firms into its Global Restructuring Group (GRG) "turnaround" unit, so it could charge higher fees and interest, and take control of their assets.

Now the FCA has appointed consultancy Promontory Financial Group and accounting firm Mazars to conduct the independent review, which will be paid for by the bank.

The FSB had called for an independent response to the Tomlinson findings.

Scottish spokesman Colin Borland said: "When the report came out with these serious allegations we said we needed to get to the bottom of it, do it properly, because such accusations will ultimately undermine the relationship between small business customers and the bank."

The review will examine the allegations of poor practice cited by Dr Tomlinson and referenced in a further report by Sir Andrew Large, and publish its findings in the third quarter.

The FCA said: "The first stage of the review will consider RBS's treatment of a sample of customers referred to its Global Restructuring Group. This will include some cases where customers have already raised concerns with Dr Tomlinson, the Department of Business, Innovation and Skills and the FCA.

"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."

Jon Pain, head of conduct and regulatory affairs at RBS, said that in addition to the FCA's review the bank had commissioned law firm Clifford Chance to further investigate loans to business customers - though critics noted that Clifford Chance are RBS' serving lawyers.

Mr Pain said: "Any customer with concerns about their experience with GRG can contact Clifford Chance to have their case examined."

The Herald has in the past year highlighted three ongoing court actions involving developers Len Wilcox, Ian McDonald and David Booth, all of whom claim to have been wrongly treated by the bank's GRG, which RBS has denied. A fourth action, involving Derek Carlyle, is headed for the Supreme Court.

The FCA says that while it does not regulate commercial lending, "if the findings reveal issues which come within the FCA's remit it will consider further regulatory measures".

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