Royal Bank of Scotland (RBS) has admitted that it has mis-sold £900m (1.17bn) in loans to small business customers under the Enterprise Finance Guarantee (EFG) scheme.
The state-backed group said the issue was identified following a review of customer files following complaints by customers to the British Business Bank (BBB), which oversees the Enterprise Finance Guarantee (EFG).
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Since the scheme was launched in 2009, RBS has lent more than £900m to 9,000 small companies who would otherwise have struggled to access credit.
BBB has found that the bank, in a number of instances, has not properly explained to customers how borrower and guarantor liabilities work under the EFG scheme.
Alison Rose, CEO Commercial and Private Banking at RBS, said: "Regrettably, the results of the review of a sample of cases have confirmed that, based on statistical analysis of our sample, there are instances where the bank’s explanation did not meet our standards."
As a response to the findings, RBS will be implementing a thorough and proactive review of affected and potentially affected customers to "ensure they are put back in the position they believed they would have been in."
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By GlobalDataRBS has also been involved in mis-selling of payment protection insurance (PPI), alongside other high street banks. PPI is supposed to protect borrowers if they were unable to meet loan repayments.
This scandal is expected to last for years, as the Financial Ombudsman Service (FOS) is still dealing with thousands of complaints every week. FOS expects that there will still be 280,000 outstanding PPI complaints by the end of March this year.
