Was RBS really 'willfully obtuse' about small business lending?

There's been much back-and-forthing between Treasury Select Committee chair Andrew Tyrie and RBS about whether its distressed small business loans division makes too much profit. Now Tyrie has accused it of being 'willfully obtuse'.

by Emma Haslett
Last Updated: 09 Oct 2014

Who or what is a ‘profit centre’, and why is there so much commotion about it? RBS bosses have repeatedly insisted the small business division of its Global Restructuring Group, which deals with distressed loans, is not one. But now Andrew Tyrie, chairman of the Treasury Select Committee, has denied their denials - and says he’s writing to the RBS chairman to complain about it.

This all started back in June, when various members of the division (known as ‘GRG’ to its mates) appeared in front of the committee, all insisting it is essentially a benign organisation which likes nothing more than to gently nurse its distressed small business clients back to health.

Derek Sach, head of the GRG, told the committee the division’s raison d’etre had been ‘misunderstood’ - and really it had high customer satisfaction levels.

That directly contradicted a report into RBS’ small business lending published back in November by Sir Andrew Large, who claimed there was a ‘potential conflict of interest’ because the GRG is an ‘internal profit centre’ which incentivises its staff to extract as much cash as possible from its clients, however distressed they are.

After the evidence session, Tyrie was clearly confused. ‘RBS has flatly contradicted an important conclusion, and concern, of [the] report,’ he said, before going off and spending a month consulting with Large about it.

Clearly, they’ve had quite a chat, because now he’s out-and-out accused RBS leaders of being ‘willfully obtuse’ during the evidence sessions.

‘If this is how RBS deals with a parliamentary committee, how much can customers and regulators rely on it to be straightforward with them?’ he asked. ‘I will be writing to the chairman of RBS about this, and the committee will report on it after the summer.’ Scary.

It’s worth pointing out RBS deputy chief executive Chris Sullivan has already written to the Treasury Committee admitting that, ‘with regard to the term of "profit centre", we wish to make clear we do not disagree with the way that that accounting term was used by Sir Andrew Large in his report’.

Hmm. ‘Willfully obtuse’, or a case of Hilary Clinton-style ‘misspeaking’? Sometimes it’s difficult to tell the two apart….

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