A US human rights group has made a complaint to the OFT and the FSA that Royal Bank of Scotland's (RBOS) takeover of Churchill is "anti-competitive".

As revealed exclusively in Insurance Times, RBOS secured the direct motor insurer for £1.1bn from parent Credit Suisse last week.

The lobby group, Inner City Press, has accused RBS of gaining an anti-competitive market share in the UK motor and household businesses. In a statement Inner City Press executive director Matthew Lee said: "RBOS is already the third largest general insurer in the UK. This proposal would give it an anticompetitive 16% market share of the UK auto market, and 13% of the UK homeowners insurance market."

The group has objected to a number of RBOS acquisitions in the US and accuses the bank of a "lack of human rights and anti-money laundering standards".

The FSA fined RBOS £750,000 in December 2002 for "breaches of its money-laundering rules".

But, according to sources, the required threshold for the percentage of market share in the motor and household market is 20%.

An OFT spokesman confirmed the merger was under review and the public can comment on the deal until 25 June. "When a company supplies more than 25% of the goods and services in any one industry, it automatically goes to us for review. This group, as any member of the public, has the right to respond to the merger until 25 June. We will have to define a specific market before we can assess what the threshold might be - 20% is not a definite figure."

An FSA spokesman said a letter had been received from the Inner City Press, but would not comment further on what action the FSA might take.

An RBOS spokeswoman said: "The comments by Inner City Press were totally and utterly bizarre and bear no resemblance to reality. RBOS had the highest of standards of governance for money-laundering, customer service and environmental management."

Meanwhile, according to sources, Churchill managing director John O'Roarke is looking to leave the group and may launch a new venture. A source said: "He put a lot of time and effort into Churchill and I think this was not what he wanted for the group's future." O'Roarke was unavailable for comment as Insurance Times went to press.

Estimates are that chairman Martin Long had 5% equity when he founded the group in 1989, which nets him around £55m-£60m from the deal. RBOS said NIG is not for sale and it believes the business is a "first class broker operation".

"It has an excellent SME book of business which can be complemented by the RBOS and Natwest SME business partnerships," said the spokeswoman.

Several hundred jobs will go from combining the IT resources of Direct Line and Churchill.

Analysts welcomed the deal for RBOS, but more importantly cash-strapped Credit Suisse. One analyst said: "Credit Suisse sold it for £1.1bn which was Churchill's GWP for 2002. No extra value was added for NIG or the brand. It was a quick fire sale to alleviate financial problems."