A £275 million scheme that was launched to encourage small and medium sized enterprises to switch from Royal Bank of Scotland appears to be having limited impact even after related incentives were increased.
Around 39,000 SMEs had moved from members of the group formerly known as Royal Bank of Scotland to rivals under the Incentivised Switching Scheme by September 30.
The original target was for 120,000 to switch by August 31.
READ MORE: Why has grand banking plan failed to deliver?
The scheme forms part of the Alternative Remedies programme, which was developed to help address EU regulators’ concerns about the £45 billion taxpayer bailout of RBS during the 2008 financial crisis.
Qualifying firms can receive dowries worth up to £50,000 if they switch from RBS group to one of 10 approved lenders. The list includes Virgin Money-owned Clydesdale Bank and Edinburgh-based Hampden & Co.
The incentives payable were increased by as much as two thirds from March in an effort to boost take-up rates.
In June, the deadline for applying to change banks was moved from August to the end of February next year while an additional 200,000 RBS group customers became eligible.
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The number of firms that have switched increased by around 5,500 between April 30 and September 30.
The scheme is administered by Banking Competition Remedies.
The Alternative Remedies Programme also includes a £425m grants programme that is intended to help build the capability of sector players and to boost innovation. Recipients of grants include online lenders such as Starling Bank and financial technology firms, including Edinburgh-based payments specialist Modulr.
In its annual report Banking Competition Remedies said the ISS had helped double the switching rate, which it described as significant achievement.
It said recipients of capability and innovation awards were using the funds to support the development of both innovative services and capabilities to enhance competition in the SME banking market
Some firms may have been reluctant to change banks amid the coronavirus crisis.
RBS group changed its name to NatWest Group in July.
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