Police are investigating allegations from a small business owner that a Royal
Bank of Scotland employee dishonestly transferred the lender’s liability on
his company to the taxpayer.
Detectives from the financial crime unit at North Wales police visited RBS’s
headquarters in London last week to look into claims from Clive May, who has
accused the bank of abusing a government-backed loan scheme designed to
boost lending to small companies.
RBS stand accussed
The case relates to the enterprise finance guarantee, in which the government
acts as guarantor on 75 per cent of the liability on individual bank loans.
The scheme is designed to help viable companies to access finance when they do
not have enough security to satisfy a high street lender’s collateral
demands. It has helped to facilitate £2.5 billion of bank credit to almost
24,000 small businesses since it was launched in 2009.
RBS is its biggest user. One of the bank’s relationship managers told Mr May,
who is based in Mold, north Wales, to remove valid security — a second home
— from the application form for one of the taxpayer-backed loans in December
2010. The property should have disqualified C May Brickwork, Mr May’s
company, from securing a guarantee. However, a second form that did not
refer to the property was submitted to the business department by RBS-owned
NatWest, allowing the government-backed loan to be drawn. C May Brickwork
subsequently failed when RBS withdrew its overdraft.
The reasons for the removal of the security are disputed. RBS has offered
varying explanations, including a suggestion that it thought that the
property was owned by Mr May’s wife. However, Mr May claims that bank
correspondence he has obtained shows that the lender had recorded the true
status of the security in its internal records before the EFG application
was made.
An RBS profile of Mr May’s “means” says he owns two houses. After his
complaints, RBS released him from his liability on the EFG loan. The bank
apologised in January after admitting serious failings in how it explained
some EFG loans, with certain customers incorrectly told the taxpayer
guarantee was for their benefit. In fact, it was solely to cover three
quarters of lenders’ liability on individual loans.
An internal review into the mis-selling is being overseen by Andrew Lewis, the
bank’s head of capital and transaction management. It is understood that RBS
has run its own inquiry into Mr May’s allegations and is cooperating with
the police investigation. North Wales Police and RBS declined to comment.
http://www.thetimes.co.uk/tto/business/industries/banking/article4488601.ece
