High street lenders and the government are under pressure to review a taxpayer-backed lending scheme after Royal Bank of Scotland admitted that it had misused the Enterprise Finance Guarantee.
Labour joined small business groups in calling for a broader inquiry into banks’ use of the EFG after an internal investigation at RBS revealed serious failings in how it explained the scheme to customers.
The EFG, which has facilitated more than £2.3 billion in funds to small businesses since its launch in 2009, provides a 75 per cent government guarantee to banks willing to back small companies that lack the security for a conventional loan.
Last week The Times revealed that RBS would conduct a “loan by loan” review of its use of the EFG after it admitted that some customers were misled that the state guarantee was for the borrower’s benefit. The guarantee is only for the lender, with customers remaining liable for the entire unsettled value of the loan.
Lloyds, HSBC and Barclays do not have plans to review their use of the scheme, all highlighting that they are subject to regular audits by the state British Business Bank, which runs the EFG.
However, Andy Keats, who co-runs the Serious Banking Complaints Bureau, said that he had been approached by EFG borrowers from all the main high street lenders complaining about how the scheme had been explained.
“I’m pleased that RBS has held its hands up,” he said. “This will put pressure on other lenders who have been doing exactly the same thing. It’s disgraceful that 100 per cent of liabilities have been claimed from people on a loan that was mis-sold in the first place.”
Sullivan, 57, departed Britain’s largest taxpayer-owned lender on Dec. 31, a spokeswoman for the Edinburgh-based bank said by telephone today. RBS said in February he would retire in 2015 after helping to oversee the restructuring of the bank. Sullivan couldn’t be reached for comment through the bank.
Attorney General John Larkin QC said there was evidence of “criminal fraud under the 2006 Act” and that the matter has now been drawn to the attention of the police
Northern Ireland’s Attorney General has accused Bank of Scotland of “criminal fraud”.
John Larkin QC made the comments in relation to the bank’s treatment of some customers who fell behind on their mortgages.
An earlier court hearing ruled the bank unfairly double-billed some customers whose mortgages were in arrears.
Bank of Scotland rejected Mr Larkin’s claims, saying it strongly takes issue with the allegations.
The bank had appealed the verdict of the earlier court hearing but dropped that appeal on Monday morning.
‘Extraordinary’ READ MORE
The procedure for bringing a private prosecution in Scotland should be made easier and more accessible, according to litigation specialist Cameron Fyfe.
A unique business venture has been formed by a solicitor in partnership with two barristers who have begun trading as a firm dedicated to bringing private prosecutions in England.
Fyfe believes there is a market sufficiently strong to enable such a venture to operate in Scotland, and says that he is approached “continually” by clients wishing to raise private actions. Only two such cases have ever proceeded in modern times.
By Rupert Hargreaves – Tuesday, 25 November, 2014
Whenever you make an investment, you are placing a huge amount of trust in the company’s management. So it’s key that management, and the company as a whole, demonstrate that they can be trusted without misleading investors. Royal Bank of Scotland (LSE: RBS) (NYSE: RBS.US) has a history of misleading investors but up until last week, many analysts and investors alike had started to believe that the company was changing for the better.
Unfortunately, RBS showed once again last week that it can’t be trusted after the bank revealed that it had made a major error in its reported capital strength in the recent European stress tests.
RBS announced at the end of last week that it had incorrectly calculated its core tier one ratio, under the simulated European Banking Authority’s three-year period of stress. The original figures suggested that the bank’s tier one ratio would fall to 6.7% by 2016, in an adverse situation.
24 November 2014 Last updated at 01:07
Royal Bank of Scotland has apologised for giving incorrect evidence to a parliamentary hearing, it has emerged.
Bank directors appeared before the Treasury Committee in June to answer claims that RBS’s Global Restructuring Group (GRG) had deliberately killed off viable firms.
Newly released letters show that RBS chairman Sir Philip Hampton later said some of the evidence “lacked clarity”.
Committee chairman Andrew Tyrie branded the evidence as “unacceptable”.
GRG handled RBS’s loans to companies considered to be a possible risk.
But there were allegations that some viable companies were deliberately forced to close by GRG.