MPs to quiz bank over loans for small firms

In a Treasury Select Committee hearing, the Yorkshire-based businessman will give evidence on his shocking report accusing state-backed RBS of driving firms to collapse in order to profit from their property assets.

The allegations made in November by Mr Tomlinson – entrepreneur-in-residence at the Department for Business, Innovation and Skills – has since sparked a forensic probe by City watchdog-appointed investigators, which could lead to a full enforcement investigation.

RBS has also hired law firm Clifford Chance to look into the claims.

The appearance comes in an already difficult week for RBS, which issued a surprise trading update revealing an extra hit of more than £3bn to cover litigation and mis-selling compensation, which is expected to push it into the red by about £8bn for 2013.

Mr Tomlinson’s report claimed to have uncovered a dossier of evidence that RBS had deliberately forced viable companies into default to buy back their properties at rock bottom prices.

The allegations centre on the turnaround division at RBS – its Global Restructuring Group (GRG).

GRG handles loans classed as being risky and is understood to have the power to scrap loan deals, impose inflated interest rates and charge hefty penalties.

But Mr Tomlinson alleged that firms not necessarily in immediate financial distress are “engineered” into GRG, sometimes through small technical breaches of loan terms.

They are then hit with exorbitant rates and fees, which in some cases cause them to collapse, allowing RBS to buy their property and assets cheaply, according to the report.