The law firm Clifford Chance has been appointed by Royal Bank of Scotland to examine allegations that the bank ran SMEs into the ground.
According to the allegations compiled by an adviser to the Business Secretary Vince Cable, RBS deliberately pushed small business to the edge in order to boost profits by stripping their assets. The dossier with the relative allegations has been handed to the regulators by Cable.
In a letter to the deputy governor of the Bank of England, Sir Andrew Large, RBS chief executive Ross McEwan said: "I have asked the law firm, Clifford Chance, to conduct an inquiry into this matter; reporting back to me in the New Year."
RBS’ move followed Sir Andrew Large’s conclusion in a report commissioned by the bank that the management structure’s lack of transparency left the bank open to accusations of having a conflict of interests.
Large’s report urged RBS and other banks to rethink the treatment of small business consumers. It also criticised the lack of lending to SMEs, a vital sector of the economy, across the whole financial services industry.
A report by Leeds-based-businessman Lawrence Tomlinson accusing RBS of forcing viable business into its Global Restructuring Group (GRG), which sells on properties to its West Register division, adds more pressure.
According to Large there is an absence of "checks and balances" in the GRG operation, with decisions over whether a business needs to be put into administration appear to be made at random.
In his letter to Large, McEwan underlined the need to solve the loans’ problem but also to correct the "reckless banking practices that broke this bank five years ago".
McEwan is also releasing another £6bn of potential lending to small business customers.