INCENTIVES to encourage small and medium sized enterprise customers of RBS to switch to other banks have been increased amid concerns the programme is not having enough impact.

The £275 million Incentivised Switching Scheme was launched in February last year with the aim of encouraging 120,000 SMEs to switch from taxpayer-owned RBS by August 25 this year.

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However, the organisation that runs it admitted yesterday that more needs to be done to get closer to the target.

Banking Competition Remedies has moved to reinvigorate the process by increasing the dowries payable to firms that move their business accounts from RBS to an approved bank by as much as two thirds.

The dowry payable to firms with turnover of less than £15,000 has been increased to £1,250 from £750.

Dowries payable to other firms with up to £1m turnover have also increased.

The chairman of BCR, Godfrey Cromwell, insisted the incentivised scheme has helped to achieve a significant increase in the number of SMEs switching from RBS to another bank.

The 12 organisations accepted on to the scheme include Glasgow-based Clydesdale Bank and Edinburgh private bank Hampden & Co.

However, the announcement of the changes comes after repeated claims that the scheme was not working as planned.

In November it was reported that only around 18,000 customers had switched in the first seven months of a scheme with an initial duration of 18 months.

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In January Clydesdale Bank owner Virgin Money indicated the scheme was not helping it to persuade as many firms as expected to switch from RBS.

It said: “The overall pace of both asset and liability switching through the scheme remains slower than expected, reflecting weaker switching demand from RBS customers.”

A spokesperson for BRC said yesterday: “The number of customers who have switched, or were in flight to do so by the end of December, was 30,000. This represents a significant increase in historic switching rates for this customer sector.”

Some £63m had been paid out in respect of account switching by the end of November. A further £4m dowries had been paid out in respect of the transfer of loan balances, based on the amount borrowed.

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The changes announced yesterday could spark debate about whether banks that have received support under BCR programmes have used it effectively.

After scaling back its expansion plans Metro Bank decided to return £50m of £120m it was awarded under a £425m programme run by Banking Competition Remedies. This is designed to increase the capability of challenger banks to compete with RBS.

The group agreed in 2017 to provide £775m in total to encourage switching in order to satisfy conditions imposed by the EU regarding the £45 billion bail out it received from the UK Government amid the global financial crisis that started in 2008.

RBS originally planned to offload Williams & Glyn bank but gave up on the idea after failing to sell it and then facing big challenges separating the operation from the rest of the group.

The changes to the dowry scheme will be back-dated to the launch of the programme.

The dowry payable to firms with turnover of between £100,000 and £1m has increased to £4,000 from £3,000.

Dowries payable to firms with more than £1m turnover have not changed.