Update on £775m State Aid Alternative Remedies Package

This is the first of three articles about the £775m State Aid Alternative Remedies Package (ARP) and highlights recent developments and how eligible bodies can participate.


Banking Competition Remedies Limited (BCR), the independent body established to implement the ARP, is holding a webinar for potential applicants for Pool D of the ARP “Capability and Innovation Fund” on 17 October 2018. This follows an information event held by BCR on 27 September 2018 for potential applicants for the ARP “Incentivised Switching Scheme” and Pools A, B and C of the Capability and Innovation Fund. BCR has also recently published further details on the application forms and key dates for both the Capability and Innovation Fund and the Incentivised Switching Scheme.


During the financial crisis the European Commission (Commission) approved various state aid measures granted to The Royal Bank of Scotland Group (RBS). This approval was given on the basis of a restructuring plan submitted by RBS and commitments made by the UK Government, including the divestment of a part of RBS’ branch-based retail and small and medium-sized enterprise (SME) business, which later became known as "Williams and Glyn" (the Divestment).

The Divestment proved difficult to implement in practice resulting in the UK Government proposing a revised package of measures to achieve the same objectives by promoting competition in the market for banking services to SMEs. The Commission approved the ARP on 18 September 2017.


The ARP provides for two schemes:

  • a £425m Capability and Innovation Fund that will make grants to eligible bodies to help them improve their banking capabilities for SMEs, and
  • up to £275m for an Incentivised Switching Scheme that will fund eligible bodies to incentivise RBS’s SME banking customers to move their business current accounts (up to an additional £75m will be made available by RBS to cover customers’ costs of moving).

Capability and Innovation Fund


The Capability and Innovation Fund is designed to encourage eligible bodies to develop and improve:

  • their capability to compete with RBS in providing banking services to SMEs, and
  • the financial products and services available to SMEs.

The Capability and Innovation Fund comprises £425m in available funding and is divided into four pools. Each pool has a distinct purpose and pre-determined number and value of grants as summarised in the table below.





1 x £120m

1 x £100m

1 x £60m

To facilitate the development of more advanced business current account offerings and ancillary products for SMEs in the UK giving preference to beneficiaries with an established business current account offering.

1 x £50m

2 x £15m

To facilitate the modernisation of existing business current account offerings or the development of new business current accounts or ancillary product propositions for SMEs in the UK.
C 4 x £10m To facilitate the development of new and existing SME lending and payments businesses with a particular focus on facilitating the deployment of new technology to the relevant markets.
D 5 x £5m To facilitate the commercialisation of financial technology that is relevant to SMEs.

The application periods for Pool A, Pool B and Pool C grants will be phased sequentially so that eligible bodies can apply for more than one round of funding if they are unsuccessful in their first application. For example, if an eligible body applies for funding from Pool B and is not awarded a grant, it will have time to apply for a grant from Pool C. The Pool D application period will run concurrently with the Pool A, B and C application periods.

The BCR has recently confirmed the following key dates: 


Application window opens

Application window closes


A 01 November 2018 31 December 2018 Week commencing 18 February 2019
B 01 February 2019 29 March 2019 Week commencing 20 May 2019
C 01 May 2019 28 June 2019 Week commencing 19 August 2019
D 01 November 2018 30 April 2019 By 30 June 2019

Incentivised Switching Scheme


The purpose of the Incentivised Switching Scheme is to provide funding of up to £275m to eligible bodies to use as incentives to encourage SME banking customers (with an annual turnover of £25m or less) of the business previously described as Williams & Glyn (WG Customers) to move their business current accounts and loans to those eligible bodies. Specifically:

  • an amount of £225m will be available in “dowries” related to any WG Customers agreeing to transfer their business current account; and
  • an amount of £50m will be available for loan related “dowries” related to those WG Customers moving a loan product in addition to their business current account.

Up to an additional £75m will be made available by RBS to cover customers’ costs of moving (eg through waiving or reimbursing break fees or other third party costs incurred by customers, such as legal fees).

Calculating the Dowries

The amount that an eligible body is entitled to receive for each WG Customer that moves will be determined based on the customer’s turnover and, if applicable, the outstanding balance on the loan product being transferred. Dowries will be distributed quarterly and eligible bodies must use the dowries for the benefit of moving WG Customers.

BCR has recently confirmed the following key dates:

Application window opens

Application window closes 


05 November 2018 30 November 2018 Mid December 2018

How to apply

It is now possible to gain access to the data room for the Capability and Innovation Fund and to the data room for the Incentivised Switching Scheme. More information about each of the schemes can be found on BCR’s website, which includes links to a significant number of documents setting out, among other things:

  • applicable terms and conditions (including eligibility criteria, supporting documents, use of funds and reporting obligations),
  • the application process and forms,
  • offer documents, and
  • legal agreements and deeds.

The second and third articles in this three-part series will consider in more detail the Incentivised Switching Scheme and the Capability and Innovation Fund respectively, including an overview of the legal documentation and tips on how to prepare a successful application. In the meantime, if you have any queries please contact Angus McLean, Charles Mayo, Peter Broadhurst or your usual Simmons & Simmons contact.

This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.