RBS 2014 Annual Report Download - page 114

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RBS – Interim Results 2015
Notes
16. Litigation, investigations and reviews (continued)
Card Protection Plan Limited
In August 2013, the FCA announced that Card Protection Plan Limited and 13 banks and credit card issuers,
including RBS, had agreed to a compensation scheme in relation to the sale of card and/or identity
protection insurance to certain retail customers. The closing date before which any claims under the
compensation scheme must have been submitted has now passed. RBS has made appropriate provision
based on its estimate of exposure arising from this scheme.
Packaged accounts
As a result of an uplift in packaged current account complaints, RBS proactively put in place dedicated
resources in 2013 to investigate and resolve complaints on an individual basis. RBS has made provisions
totalling £307 million to date for this matter.
FCA review of RBS’ treatment of SMEs
In November 2013, a report by Lawrence Tomlinson, entrepreneur in residence at the UK Government’s
Department for Business Innovation and Skills, was published (“Tomlinson Report”). The Tomlinson Report
was critical of RBS’ treatment of SMEs. The Tomlinson Report was passed to the PRA and FCA. Shortly
thereafter, the FCA announced that an independent Skilled Person would be appointed under Section 166 of
the Financial Services and Markets Act to review the allegations in the Tomlinson Report. The Skilled
Person’s review is focused on RBS’ UK small and medium sized business customers with credit exposures
of up to £20 million whose relationship was managed within RBS’ Global Restructuring Group or within
similar units within RBS’ Corporate Banking Division that were focused on customers in financial difficulties.
In the period 2008 to 2013 RBS was one of the leading providers of credit to the UK SME sector.
Separately, in November 2013, RBS instructed the law firm Clifford Chance to conduct an independent
review of the principal allegation made in the Tomlinson Report: RBS was alleged to be culpable of
systematic and institutional behaviour in artificially distressing otherwise viable businesses and through that
putting businesses into insolvency. Clifford Chance published its report on 17 April 2014 and, while they
made certain recommendations to enhance customer experience and transparency of pricing, they
concluded that there was no evidence to support the principal allegation.
A separate independent review of the principal allegation, led by Mason Hayes & Curran, Solicitors, was
conducted in the Republic of Ireland. The report was published in December 2014 and found no evidence to
support the principal allegation.
On 17 January 2014, a Skilled Person was appointed. RBS is fully cooperating with the FCA in its review.
The Skilled Person review focuses on the allegations made by Lawrence Tomlinson in the Tomlinson Report
and certain observations made by Sir Andrew Large in his 2013 Independent Lending Review, and is
broader in scope than the reviews undertaken by Clifford Chance and Mason, Hayes & Curran which are
referred to above. The timing for the delivery of the initial findings of such review by the Skilled Person to
RBS and the FCA is not finally determined but may be during the fourth quarter of 2015. RBS will have an
opportunity to respond to any findings of such review before the Skilled Person delivers its final report. In the
event that the Skilled Person’s review concludes that there were material failings in RBS’ treatment of SME
customers those conclusions could, depending on their nature, scale and type, result in the commencement
of regulatory enforcement action by the FCA, the imposition of redress requirements and the
commencement of litigation claims against RBS, as well as potentially wider investigations and litigation
related to RBS’s treatment of customers in financial difficulty. At this stage, as there remains considerable
uncertainty around the final conclusions of the Skilled Person’s review and any collateral consequences
thereof, it is not practicable reliably to estimate the potential impact on RBS.