Frequently Asked Questions

Capability and Innovation Fund:
Pools A, B and C

Capability and Innovation Fund:
Pool D

Capability and Innovation Fund: All Pools

Incentivised Switching Scheme

FAQs relating to both schemes

A: You will find the permitted use of funds in Clause 3 of the terms and conditions here. BCR will review and assess all business cases on their own merits. We believe the application form gives any entity the ability to demonstrate its projected financial performance over time.

A: It is not simply a subset. 2.5.3 is very specific on information around your implementation costs whereas 2.4.2 (ii) requires applicants to give information on financial analysis in the context of the entire bid. 

A: You should take your own legal advice on the terms of the CIF agreement, but your options, if you do not comply, would be to breach the contract or to repay the Funding Amount plus interest in accordance with clause 7.1(b) so that the CIF agreement terminates under clause 10.1(B).

A:  You should take your own legal advice on the terms of the CIF agreement but no, this clause applies irrespective of which company is applying for funding. The successful applicant is responsible for procuring compliance with the clause. The contractual termination rights are set out in clause 10.

A: You should take your own legal advice on the terms of the CIF agreement but no, these clauses apply irrespective of which company is applying for funding. The successful applicant is responsible for procuring compliance with the clauses by its group. 

A: You should take your own legal advice on the terms of the CIF agreement. There are a number of decisions and determinations that BCR has the power to make. For example, clause 7.1 sets out the right for BCR to determine that a Material Breach has occurred and clause 5.7 allows for BCR to decide in its sole discretion whether to accept an Updated Business Case or a Revised Business Case. Clauses 8.4 and 8.5 make it clear that those decisions and determinations can be exercised by BCR at its own discretion without recourse under the CIF agreement.

A: Based on the applications received for Pool A, BCR will be making a change to the Capability and Innovation Fund Agreements (“CIF Agreements”) for successful Pool A applicants as follows:

•  Update to Clause 10.1 (A) to reflect the termination of the CIF Agreement as being on “the earlier of (i) the date as agreed between The Commissioners of Her Majesty’s Treasury, the Independent Body and The Royal Bank of Scotland Group plc on which the winding up process of the Independent Body shall commence; and (ii) 25 April 2022.” 

This change has been made to better reflect applicants’ anticipated timing for deploying the Pool A CIF funds. 

In respect of future pools, BCR will assess whether it is appropriate to make similar changes to CIF Agreements entered into with successful applicants. While the application for CIF funds suggests a 3-5 year delivery timeline, it is down to each applicant to advise their own respective deadlines for delivery which, in some cases, may be less than 3 years. Once the successful applicants have been selected, BCR will determine the appropriate amendments, if any, that need to be made to the CIF Agreements and CIF awards will be conditional upon successful applicants accepting those changes.

A: BCR expects applicants to use all funds awarded in accordance with the approved Business Case and excess funds achieved through cost savings would not be generally available to the applicant for other purposes. The Business Case can be updated from time to time in accordance with the process set out in the CIF agreement. So if cost savings are achieved then BCR would expect those funds to be used in accordance with the Business Case, and if the Business Case does not cater for the use of these funds BCR would expect the applicant to submit an amended Business Case for assessment by BCR. It is not anticipated that any cost savings would be returned to BCR, but this could happen where, for example, a revised Business Case is not approved by BCR.

A: As part of the evaluation process, BCR would need to be satisfied that the matched funding stipulated in the business case would be made available by the Applicant. If the funds were not readily available, the Applicant Company would need to evidence their strategy to raise the funds. It will be at the discretion of BCR as to whether this would be deemed acceptable. 

A: BCR would ordinarily expect the capital to be raised as equity. If this is not the case  BCR will consider on a case by case basis any other structures such as convertible loans or subordinated loans, and will need to be satisfied that the proceeds of these structures are genuinely available to the entity and are equity-like, e.g. are subordinated to other liabilities. If this is not the case applicants must be very clear in their submission the nature of the source of funds and BCR will consider these on a case-by-case.

A: The definition of an SME is a small or medium-sized enterprise, being a business (including incorporated legal entities, sole traders, partnerships, not-for-profit organisations and clubs, charities and societies) that, in respect of any given financial year applying to it, has annual revenues (exclusive of VAT and other turnover-related Taxes) not exceeding £25million. This definition is carried through to all of the Pools.

A: These terms are not defined and so should be given their ordinary meaning, however, in your responses to the Governance section please ensure you are clear about how you intend to deliver on your public commitments e.g. if in your business case if you have a substantial element of CapEx or marketing cost you will need to demonstrate to BCR, on an ongoing basis, how you are tracking your implementation approach.

A: The requirements for the use of the funds are set out in the CIF terms and conditions which you can find here. In particular, condition 3.3 explains the purposes for which the funding can be used. You will see that the requirements are essentially that the use of the funds focuses on ensuring that the Fintech Product or Service is improved or developed in the United Kingdom. BCR’s interpretation of this requirement is that, provided the use of funds improves the Fintech Product or Service for use in the UK, the actual expenditure does not need to be exclusively within the UK. So, in your example, employees could be outside of the UK provided that they are working on improving the Fintech Product or Service for use in the UK.

A: It is not clear precisely how you envisage using the CIF funds but the requirements for the use of the funds are set out in the CIF terms and conditions which you can find here. In particular, condition 3.3 explains the purposes for which the funding can be used as well as a list of specific purposes for which the funds cannot be used. It is not permitted to, among other things, use the CIF funds to repay any existing liability or to provide financing directly to customers.

A: There are a number of occasions where funds might be repayable and these are set out in the Capability and Innovation Fund Agreement at clause 7. In summary, these occasions are:

  • In the event that an applicant is not able to use the funds in accordance with the business case that was submitted and any subsequent updated business case is not approved. In this instance, Banking Competition Remedies may request the repayment (in full or in part ) of the Funding amount in which case the Company will be expected to make the repayment (together with interest at an annual interest rate equal to 8% above the Bank of England base rate, compounded quarterly and accruing from the date Banking Competition Remedies paid the Funding Amount to the Company until the date of repayment) within 5 business days of the date of the demand.
  • In the case of a Material Breach which is not capable of remedy or the Company has not provided Banking Competition Remedies with evidence to our satisfaction that the Material Breach has been remedied within the period specified by Banking Competition Remedies. Material Breaches are any material breaches of the Capability and Innovation Fund Agreement and include i) failure to use the Funding Amount for Permitted Purposes or in accordance with the business case or ii) use of the Funding Amount for Prohibited Purposes. In this instance, Banking Competition Remedies may request the repayment (in full or in part) of the Funding Amount in which case the Company will be expected to make the repayment (together with interest at an annual interest rate equal to 8% above the Bank of England base rate, compounded quarterly and accruing from the date Banking Competition Remedies paid the Funding Amount to the Company until the date of repayment) within 5 business days of the date of the demand.

If there is a change of control of the company such that the Company’s parent undertaking or another subsidiary undertaking of such parent undertaking is a bank with an SME market share in the UK of more than 14%, the company shall within 10 business days of such change of control return to Banking Competition Remedies any part of the Funding Amount which it has not spent as at the date that the transaction which would give rise to the Change of Control is announced. 

A: As per section 2.8 of the Capability and Innovation Fund Terms and Conditions, “Applicants should seek their own legal, financial, tax, regulatory and/or accounting advice before making any decision to apply for funding from or to participate in the Capability and Innovation Fund.”

A: Section 3 of the Capability and Innovation Fund Terms and Conditions which can be found here extensively addresses the Use of Funds for any applicant. You should review these ahead of making any submission to the fund.

A: Business cases that deliver a benefit sooner will be viewed more favourably. As part of your application, you should consider if successful,  in what timeframe you will spend funds and a realistic timeframe in which you will derive benefits from the funds for SMEs. We expect that this will be individual to each applicant and will also depend on the size of any award. If your application is successful, you will be also be required to publish public commitments. If you fail to meet the milestones you have promised, you risk having funds clawed back so it is important that you are comfortable with the timelines in your submission.

A: Section 3 of the Capability and Innovation Fund Terms and Conditions which can be found here extensively addresses the Use of Funds for any applicant. You should review these ahead of making any submission to the fund.

A: BCR will consider each business case on its merits and does not intend to supplement the CIF terms and conditions with other restrictions on the use of funds, for example, by preventing applicants from using funds to acquire another business. However, BCR expects it to be difficult for an applicant to demonstrate that acquiring another business is (i) consistent with the Overarching Principles and the purpose of the Alternative Remedies Package, (ii) sufficiently certain that the applicant can deliver the transaction, yet (iii) is not capital expenditure that would be made by the applicant in any event or has been included in the applicant’s business plan prior to the application. 

A: Each application will be evaluated on its own merits. The Independent Body is expecting that in all cases, there will be one eligible entity as the applicant and that entity will need to satisfy all of the eligibility criteria. It may be that, in order to deliver on the relevant business case, another entity is critical to the application, and therefore the Independent Body would want to understand the relationship that the applicant has with that entity.

However, the applicant will need to ensure that the CIF funds are used for Permitted Purposes only (and not Prohibited Purposes) (each as defined in the CIF agreement), and so will need to take this into account when defining its relationship with the other entity.

A: BCR will consider, in light of the applications received, the appropriate scope and frequency of information to be made public.  Once the Capability and Innovation Fund agreements have been signed by successful applicants, their public commitments will be published on the BCR website. BCR is also required to publish a public report on the progress made in achieving the Alternative Remedies Package objectives and the use of funds annually.  

A: Use of funds as a capital reserve required by a regulator is not considered an appropriate use of funds. Section 3 of the Capability and Innovation Fund Terms and Conditions which can be found here extensively addresses the Use of Funds for any applicant. You should review these ahead of making any submission. 

A: BCR recognises that applicants will need to provide confidential information to BCR in connection with the application process. BCR will use reasonable endeavours to keep that information confidential. BCR may share confidential information where required by applicable law or regulation. In addition, BCR may share confidential information with its employees, advisers, contractors, the monitor, HMT, the monitor’s and HMT’s employees, advisers and contractors, but will use reasonable endeavours to ensure that the recipient owes a duty of confidentiality in respect of that information.  In addition, on announcement of the successful applicants for grants, their public commitments will be published on the BCR website.

A: Successful applicants to the Capability and Innovation Fund will be required to submit reporting on a quarterly basis. The first of these reports will be required within ten business days of the end of each three-calendar month period, beginning three calendar months immediately following the signature of the Fund Agreement. Successful applicants should be prepared to enter into a Fund Agreement in the form provided on the website promptly following being awarded the grant. BCR may also request additional reporting where it considers it is appropriate. Reporting will end in line with the termination of the Fund Agreement, however there is likely to be a market expectation for the firm to continue to publish against Public Commitments beyond the lifespan of Banking Competition Remedies Limited. 

A: Quarterly MI for successful applications will be based on the core information required in the application form which is outlined clearly within section 4 Reporting Obligations of the Capability and Innovation Fund Agreement and any additional KPIs the successful applicant provides as part of the business case. 

A: BCR can confirm there will be no per institution basis reporting publicly. However, information received by BCR may be disclosed by BCR (i) where required by applicable law or regulation, or (ii) to its directors, officers, agents, employees, advisers, contractors, RBS, the monitor, HMT and RBS’s, the monitor’s and HMT’s directors, officers, agents, employees, advisers and contractors, although in the case of (ii) BCR will use its reasonable endeavours to ensure that the recipient owes a duty of confidentiality in respect of that information.

A: BCR have the right to clawback any dowry already paid out if it believes there has been a ‘Material Breach’ as defined in the Incentivised Switching Agreement.

A: RBS have set-up a dedicated Customer Support Team (CST) (Opening hours: Monday to Friday 8am – 6pm, excluding bank holidays) who will answer calls for our Business Banking customers – RBS: 0800 151 2980 / 0345 050 2978 / 0161 933 8108 (Live on April 2018) and Natwest : 0800 151 2991 / 0345 050 2989 / 0161 933 8119.

A: ‘Rejection’ means any Target Customer who has either signed an application form or submitted an online application to open a Business Current Account and have been notified that their application has been rejected by the Applicant Company.

As per clause 3.18 (B) of the Incentivised Switching Agreement:

…the Company shall, at its own cost, provide to the IB in writing:

if applicable, a list (amalgamated by reason(s) for rejection and by Turnover Band) of Target Customers who have been rejected from becoming customers of the Company during the relevant calendar month and an explanation (in reasonable detail) of the reason(s) for such rejection(s).

A: Yes, and RBS will also waive break costs as long as Customers switch their Primary Business Current Account under the Incentivised Switching Scheme. RBS has produced the Customer Reimbursement Policy which reflects and implements the ‘Fees Waiver Schedule’ referenced in the Incentivised Switching Agreement. Incentivised Switching Eligible Bodies can obtain the Customer Reimbursement Policy direct from RBS (upon signing their Non Disclosure Agreement) by contacting Jon Simpson or Nick Perkins.

A: Yes, BCR can clawback in full (or in part) the dowries paid to successful Applicant Companies as stated in Clause 6.7 (B). In exercising its discretion, BCR will take into account all the circumstances and it is only likely to clawback dowries that have already been paid in exceptional circumstances.

A: Clause 13 refers to payments between BCR and participating banks. Applicant companies should take the responsibility of determining the tax treatments on any transactions between the Company and Switching Customers in line with its usual course of business.

A: Applicant companies should take the responsibility of determining the tax treatments on any transactions between the Company and Switching Customers in line with its usual course of business.

A: The IS Agreement sets out all termination rights. There is no express right for an applicant to terminate for business exigency.

A: The unique customer reference identifier will be the main identifier of a customer. The dowry will be paid when the customer becomes a Transferring Target Customer i.e. a Target Customer that closes its Primary Account(s) with RBS and has opened a BCA with an Applicant Company, i.e. they have successfully switched their account.

A: The ISS Terms & Conditions state that ‘…The Applicant Company may only use the Dowries it receives in connection with Incentivised Switching in accordance with its Switching Proposal’. 

Therefore if any Dowries paid to Eligible Bodies have not been used in the manner outlined in the Switching Proposal these will need to be reported to BCR in the normal cycle of reporting and Eligible Bodies will be required to repay those Dowries to BCR. These may include:

– Dowry to be paid out as cash.
– Dowry for direct incentives other than cash.
– Dowry retained for indirect incentives.

Updated guidance on reporting will follow nearer the time here.

A: a. Details on this report can be found under the ‘BCR Target Customer Report’, ‘Requirements’ on the reporting guidance page found here. It is envisaged this will be a high-level report without details of individual Eligible Bodies or SME customers.

b. RBS will provide BCR with this information.

A: Eligible Bodies should use the process set out in clause 6 to make a change to their Switching Proposal and/or Company Offering. This should be used regardless of whether the update is in relation to an amendment which BCR has made under clause 3.9 or whether it has been instigated by the Eligible Body independently of an amendment under clause 3.9. In all instances BCR will retain discretion as to whether to accept the updated Switching Proposal and/or Company Offering. However, in practice, updates which are evidently required to bring the offer in line with changes under clause 3.9 are not likely to be rejected.

BCR will communicate more details on the process in due course.

A: Eligible Bodies are expected to fulfil the incentivised switching offers which are current at the point that customer select them on the microsite. It is not envisaged that the dowry amount will change. In the unlikely event that this does occur, then BCR will provide Eligible Bodies with guidance on how this will take place so as to ensure that no Eligible Body is disadvantaged. 

A: As per the ISS Reporting Guidance for each dowry payment you are required to state any amounts that were planned to benefit customers in that Assessment Period which were unable to be used. These should be reported under ‘PROPORTION (£X.XX) OF THE RELEVANT DOWRY UNABLE TO BE USED TO BENEFIT CUSTOMERS’ in the EB Monthly Dowry Report with an explanation.

The relevant details for repayment of those amounts from Eligible Bodies to BCR will follow. 

The Senior Management Function (SMF) serves as an accountable person within organisations participating in either the Incentivised Switching Scheme or the Capability and Innovation Fund. Even if the individual in the SMF post changes, there should be continuity of this role from the point of application through to termination of the Agreement.

A: We do not have this facility available on our website. We will be updating FAQ’s regularly and other information as required. The Scout Tool, which will be used to manage the application process, does have an alert capability and this will be deployed.

A: The SMF (for both CIF and ISS) should be the accountable point of contact for BCR from the point of application through to the termination of the Agreement (see Q2 of the FAQs relating to CIF & ISS on the BCR website). This accountability covers submission of an Application Form, entrance into an Agreement (if successful) and delivery of and reporting on the Company’s obligation within the Agreement (if successful). The Applicant Company’s Board is ultimately accountable and should establish its own governance accordingly, including accountabilities of parties within the organisation.

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