Royal Bank of Scotland is setting up a £400 million ($497 million) scheme to reimburse fees to customers who claim they were mistreated by its small business restructuring unit, as it seeks to draw a line under one of its longest-running customer service battles.
The taxpayer-owned bank said on Tuesday it would set aside the sum after years of defending itself against claims that its Global Restructuring Group deliberately pushed some companies into bankruptcy so it could pick up their assets more cheaply.
The bank admitted some wrongdoing over the way it handled small businesses, while stopping short of claims they were deliberately pushed into administration.
"I am very sorry that we did not provide the level of service and understanding we should have done," RBS Chief Executive Ross McEwan said in a statement.
Specifically, RBS admitted it could have managed the transfer of customers to the GRG unit better and should have explained any changes to management and sales charges more carefully.
The bank is setting up a new complaints process and will automatically refund the disputed fees to affected borrowers.
Separately, Britain's Financial Conduct Authority said it welcomed news of the complaints process and fee refund scheme, to be indepedently overseen by former High Court judge William Blackburne.
"While the FCA still needs to see further detail about how the scheme will operate, we believe that it is an important step for RBS to put in place an appropriate complaints review process which should provide certain SME customers with a route to make a formal complaint, should they wish to do so," the FCA said.
Faults
The clashes with hundreds of former borrowers have been among the most reputationally damaging to RBS since the financial crisis, striking at the heart of the bank's core strategy to become Britain's most trusted retail and business lender.
RBS has previously vigorously contested these allegations but in last month's third-quarter results, McEwan admitted the bank had mistreated some customers, paving the way for Tuesday's fee refund scheme launch.
The RBS announcement coincides with an appearance by Andrew Bailey, the FCA chief executive at the Treasury Select Committee later on Tuesday.
Offering fee refunds and setting up a new complaints scheme could help the bank avoid costly litigation linked to faults at GRG, which includes a possible class action from hundreds of businesses.
Reuters has previously reported that the cost to the bank of settling claims from small firms could run into billions of pounds.