MPs to investigate treatment of small businesses in wake of RBS GRG scandal and Carillion collapse

Jasper Jolly
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RBS has received censure for the GRG scandal (Source: Getty)

Two influential parliamentary committees will today launch investigations into finance for small businesses in the wake of the scandal over Royal Bank of Scotland's much maligned global restructuring group (GRG).

The Treasury Select Committee will investigate the repercussions from the GRG scandal and the state of the market for small businesses, while the Business, Energy and Industrial Strategy (Beis) inquiry will look at government support for small businesses' productivity and their protection against unfair treatment.

The inquiries come after increased focus on the treatment of small businesses since the financial crisis. The GRG scandal highlighted the difficulty for small firms dealing with large banks: former GRG executives are accused of unethical practices against vulnerable clients, including deliberately charging high fees.

Read more: FCA to publish critical GRG report after RBS bosses waive objections

Nicky Morgan, head of the Treasury Select Committee, said: “The case of GRG has undermined the trust of small firms in banks, and highlighted the imbalanced and potentially exploitative relationship between banks and SMEs.

“Little has changed since GRG to prevent similar mistreatment happening again, nor to guarantee victims access to fair and reasonable redress."

Meanwhile, the Beis Select Committee will look at whether small firms have sufficient access to good quality management training.

It will also look at government measures, such as the establishment of the Small Business Commissioner, to help small firms affected by late payments from suppliers.

The Beis committee chair, Rachel Reeves, said: "The collapse of Carillion has also thrown light on the treatment of small companies by large firms and the difficulties caused by late payments. Deliberate supply chain bullying can be devastating for business owners and contributes to thousands of business deaths each year."

Read more: FCA helps small firms bypass court after RBS restructuring unit controversy

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