By Matt Scuffham
LONDON Jan 22 (Reuters) - The author of a report into state-backed Royal Bank of Scotland's lending to small businesses said he found no evidence of the bank engineering companies into default.
Andrew Large, who was commissioned by RBS last year to conduct the review, said he hadn't found anything to back up accusations made in a separate report by government adviser Lawrence Tomlinson. However, he did say there was an "element of plausibility" behind them.
Tomlinson had said that RBS, which is 82-percent owned by the government, pushed struggling small businesses into its Global Restructuring Group (GRG) turnaround unit, enabling it to charge higher fees and take control of their assets.
"There's an element of plausibility in the assertions that are in the Tomlinson report ... but that doesn't mean to say I think those activities are actually happening. I didn't have any evidence of them," Large, a former deputy governor of the Bank of England, told parliament's Treasury Select Committee on Wednesday.
Britain's financial regulator has launched an inquiry into RBS's treatment of struggling small businesses and will publish its findings in the third quarter. RBS, meanwhile, has appointed law firm Clifford Chance to examine the matter.
If the regulator were to find evidence to back up Tomlinson's claims, RBS could be subject to a criminal investigation.
RBS Chief Executive Ross McEwan said last November that he didn't believe the bank had conducted a systemic effort to profit on the back of customers in financial distress and that no evidence had been provided to support that allegation.
Tomlinson is an adviser within Liberal Democrat Vince Cable's Business Department, but the report in which his accusations were published was not an official government report.
Large told the committee that Tomlinson's report amounted to a "set of assertions" and said that he would have wanted to "put more substance behind them".