Abuses of small businesses by RBS and others 'a bigger scandal than PPI'

Abuses of small and medium-sized businesses by Royal Bank of Scotland Group Plc and other major British lenders are potentially an even bigger scandal than the misselling of payment protection insurance, according to U.K. members of parliament, who are calling for the creation of a tribunal system for small businesses mistreated by banks.

RBS' now-defunct Global Restructuring Group, a business unit known as the GRG into which struggling companies were transferred, has caused "immeasurable" losses to the British economy by forcing otherwise viable businesses into insolvency, MP Clive Lewis of the opposition Labour Party said during a Jan. 18 debate in the House of Commons. His comments came the day after the influential Treasury Select Committee released an internal RBS memo dating back to 2009, urging employees in the GRG to let small businesses "hang themselves."

Amid complaints from many of the companies transferred into the GRG that the unit drove them out of business and used them for RBS' own profit, the U.K. Financial Conduct Authority commissioned a review of the division that was completed in 2017. The report was leaked to the BBC, but the FCA has declined to publish it in full, citing among other reasons the need to allow for those named within it to respond to criticisms, a process known in the U.K. as Maxwellization.

But MPs who had been able to see the report were...