Royal Bank of Scotland (RBS), which has come under fire over its treatment of businesses in financial difficulty, is to halve unauthorised overdraft fees for thousands of business customers
From next month, RBS is reducing the interest rate on unarranged overdraft fees from 29.5% annually of the amount overdrawn to 15%.
RBS, which has the largest share of the business banking market, will also cut fees for unpaid cheques and other penalties and reduce the maximum charge businesses can incur in a month.
Early in 2014 the Financial Conduct Authority (FCA) appointed Promontory Financial Group and Mazars to conduct an independent skilled persons report examining RBS’s treatment of business customers in financial difficulty amid allegations of poor practice.
The review, which has been looking at cases of customers referred to the bank’s Global Restructuring Group and considering whether there was a systemic problem in the way in which they were handled, has been described as ‘complex’ by the FCA. Publication of the review outcomes is expected by the end of this year.
John Allan, chairman of the Federation of Small Businesses FSB, said: ‘Over the past few years there have been a number of issues which have led to small business confidence in the banking sector being undermined. The measures being taken by RBS are an example of the sort of steps banks should be considering to help rebuild trust among small firms.’
Jonathan Russell, partner at ReesRussell which is member of the UK200Group of independent accountancy and law firms, said: ‘It would be good to believe that RBS is doing this to assist business but even in their own papers they say it is to try and restore their severely damaged reputation.
‘Properly run businesses should not be incurring unauthorised overdraft fees though it is not unusual for some businesses to technically go over agreed limits because of the “clearance” delay within the banking system, which in this modern electronic age is a nonsense anyway.
'Reducing other fees is good news but is probably in part an acceptance that often charges are well removed from the cost of delivery and this is something banks have already been taken to task over.’
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