* Bank to shut down West Register property division
* Accusations were made in report by government adviser
* Govt adviser says report is not a clean bill of health
* Investigation by financial regulator ongoing
(Adds reaction from government adviser, lawyer)
By Matt Scuffham
LONDON, April 17 Royal Bank of Scotland
said on Thursday that an independent review by law firm Clifford
Chance had found no evidence that it set out to defraud its
The bank, which is 81 percent-owned by the government,
commissioned the review after a government adviser accused it of
pushing struggling small businesses into its "turnaround" unit,
so it could charge higher fees and take control of their assets.
"I welcome the Clifford Chance findings, which show no
evidence of the serious and damaging allegation that we had set
out to deliberately defraud our business customers," Chief
Executive Ross McEwan said on Thursday.
Lawrence Tomlinson, who serves as an
"entrepreneur-in-residence" at government minister Vince Cable's
business department, said RBS had engineered businesses into
default to move them into its Global Restructuring Group (GRG).
He said that enabled it to generate revenue through higher
fees and the purchase of devalued assets by its property
division, West Register.
Tomlinson said on Thursday that the Clifford Chance report
had not given RBS a clean bill of health because the broader
findings showed a "lack of fee transparency, lack of adherence
to mandatory rules for internal valuations and a need for an
improvement in the business culture at GRG".
"It's important to note that Clifford Chance did not
investigate or reach conclusions on areas such as the validity
of valuations and treatment of businesses," he said.
In response to the Clifford Chance report, RBS said it will
wind down and sell any assets in West Register and will not
increase interest charges for 90 days after a small business
The bank said the report found some cases where customers
felt that its fees were not clear and a handful of clients had
made allegations about the behaviour of bank staff. RBS said it
is investigating those cases.
McEwan said that GRG had successfully turned round the vast
majority of businesses it worked with, while continuing to deal
with billions of pounds in bad loans built up by reckless
lending in the run up to the 2008 financial crisis.
GRG's activities are still the subject of a review by
Britain's financial regulator.
"I look forward to the FCA publishing their findings later
this year, as their scope is much more robust, far reaching and,
of course, independent," Tomlinson said.
Alison Loveday, managing partner at law firm Berg, which has
received more than 150 complaints about GRG, said the Clifford
Chance report was flawed.
"If a customer said one thing and the bank another, they did
not, as part of their review, seek to deal with the factual
dispute. So one presumes they just favoured one over the other,"
(Editing by Greg Mahlich and David Goodman)