According to Bloomberg,
RBS said in an e-mailed statement today it appointed the law firm after a report by Lawrence Tomlinson, chairman and founder of LNT Group Ltd., said that once companies were in default, the bank could charge them advisory fees and buy their assets at reduced prices. Business Secretary Vince Cable has referred RBS to the Financial Conduct Authority.
U.K. banks, including 81 percent taxpayer-owned RBS, have been criticized by the government for holding back lending to businesses since the 2008 financial crisis as they boost capital reserves and clean up their balance sheets. The Bank of England earlier this year extended its plan to provide cheap loans to companies and consumers and make credit available for small firms to help support the economy.
“There are many devastating stories of how RBS has wrecked good businesses and the ruinous impact this has on the lives of the business owners,” Tomlinson said in an e-mailed statement.
Chris Hamilton, a spokesman for the FCA in London, declined to comment on the report, as did a spokesman for the U.K.’s Prudential Regulation Authority. RBS said that Clifford Chance is scheduled to report its findings in 2014.
Cable has previously signaled concerns about small and medium-sized companies’ access to finance and in 2010 called bankers “spivs and gamblers.” Tomlinson, entrepreneur in residence at Cable’s department, compiled allegations about companies’ difficulties with their banks during the recession and turned them into a report for Cable. Chancellor of the Exchequer George Osborne today called the results “shocking.”