City watchdog the Financial Services Authority (FCA) has said that reports earlier this week on the lending practices of RBS have prompted it to write "to all other relevant banks seeking confirmation that they are satisfied they do not engage in any of the poor practices alleged in the reports."
Allegations that RBS made a "systematic" effort to profit from the troubles of its business customers have raised concerns for the FCA as to whether the bank treated its customers properly, particularly those in financial difficulty. The regulator says it has "now considered" the reports published by Andrew Large and Lawrence Tomlinson.
Commercial lending it not regulated by the FCA, but it has agreed with RBS that a review by an "independent skilled person" into its practices will take place and, if the findings from that review "reveal issues which come within the FCA’s remit, the FCA will consider further regulatory measures".
Clive Adamson, director of supervision at the FCA, said:
These allegations, if proved, raise serious concerns about how banks’ treat their customers. An SME’s relationship with its bank is essential for any business to have a chance to succeed, and claims like the ones made threaten to undermine that. We expect all firms to act with integrity and put customers at the heart of their business.
Here's the text of the letter the FCA is sending to other banks (emphasis our own):
You are aware that commercial lending is not a regulated activity under the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001. Nevertheless, the allegations in these reports gave the FCA concerns as to whether firms are treating their customers appropriately, in particular those in financial difficulties. This may indicate wider concerns in relation to governance and culture within firms. We expect firms to act with integrity across all of their
If you have not yet read the reports I would encourage you to do so, and satisfy yourself that your group does not engage in any of the poor practices alleged in the reports. I expect any poor practices identified to be addressed. We will discuss your findings with you, and the basis for them, in one of our regular meetings with you.
We will be disclosing publicly that we have asked banks to take these steps. Also, we will be sending a copy of this letter to the Department of Business, Innovation and Skills and HM Treasury for information.