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Critic of RBS business lending had own complaint against bank

By Matt Scuffham

LONDON (Reuters) - The author of a report that criticizes Royal Bank of Scotland's (RBS.L) dealings with small businesses had lodged a complaint about the way his own business was treated by the British bank, a colleague of his told Reuters on Monday.

Lawrence Tomlinson, an adviser to UK Business Secretary Vince Cable, did not disclose in his report issued earlier in the day that LNT Group, the construction-to-care homes company he runs in the north of England, previously had a grievance with RBS.

A colleague of Tomlinson said there was no conflict of interest in the non-disclosure because LNT's complaint had nothing to do with the practices of RBS's turnaround unit Global Restructuring Group (GRG), which his report is concerned with, and was not part of his evidence.

"There was a complaint. It's been dealt with by RBS and it's entirely separate from the GRG issue," Fiona Mawer told Reuters, adding that LNT Group had never been moved under GRG's control.

Mawer said Tomlinson had "never made a secret of the fact he is an RBS customer".

Britain's business department said the report into RBS's treatment of small business customers in financial distress had not been commissioned by the department and was entirely Tomlinson's own work.

"The case studies that underpin Lawrence Tomlinson's independent report are those of businesses who have provided him with evidence, rather than his own personal experience," a business department spokesman said.

The spokesman said Tomlinson's relationship with RBS was not considered relevant when passing the contents of the report to regulators.

Business Secretary Vince Cable has demanded an urgent response from RBS and Britain's financial regulator.

RBS, which has appointed Clifford Chance to conduct an inquiry into some of the issues raised by Tomlinson, declined to comment.

(Additional reporting by William James; Editing by David Goodman and Jane Merriman)