RBS sets aside £400m to compensate GRG customers

The Royal Bank of Scotland (RBS) has announced the launch of a new complaints process and has set aside £400m to compensate small business customers that allegedly suffered at the hands of its Global Restructuring Group (GRG) during the period 2008/2013.

This follows an independent review of GRG set up in 2014, overseen by the Financial Conduct Authority (FCA), the headlines of which have this week been released to the public, following several months delay. GRG was an area of the bank set up to support and guide RBS and NatWest business customers experiencing financial difficulty, working with them with the aim of returning those customers to mainstream banking, wherever possible.  In many cases however, the customers experience was traumatic and painful, leading to accusations that the bank artificially distressed some of its SME customers for its own gain.

The FCA have concluded that whilst the report finds this particular claim to be unfounded , there are a number of other areas where RBS demonstrated poor and inappropriate practice. The Chief Executive of RBS Group Ross McEwan admitted ‘mistakes were made, I am very sorry that we did not provide the level of service and understanding we should have. We believe that now is the right time to deal with the areas where we accept some customers were let down in the past’.

Dave Jones, Consultant at KBL Solicitors commented “The overall findings of the report will disappoint RBS as it has been forced to set up yet another compensation process for a core service that has failed customers. Whilst the more damaging claims of engineering positions for the benefit of the bank have proved unfounded, conflicts of interest with the in house property company West Register, poor and misleading communication together with undue focus on pricing increases and debt reduction feature heavily in the report”.

The compensation scheme will also include automatic refunds for ‘complex fees’ charged to some SME customers. The RBS review proposals have been agreed with the FCA.

Michael Slater, Partner and Head of Commercial Litigation at KBL Solicitors “These cases are particularly distressing for those who have found themselves inappropriately trapped in the clutches of GRG. The often indiscriminate and heavily weighted terms in favour of West Register in Equity Participation Agreements comes in for particular criticism. As a firm, where appropriate, we intend on assisting businesses exploited by GRG to put them back in the position financially they would have been had the bank not intervened.”

The FCA has also welcomed the RBS decision to appoint Sir William Blackburne, a retired High Court judge, to oversee the review process. Sir William will report back to the FCA on a regular basis.

Dave Jones again  “What will be critical is that any RBS or NatWest customer with a poor experience of GRG will need to ensure that they have a clear, chronological and coherent case to put to the bank in line with the findings presented in the Independent  FCA report”. The FCA have confirmed that in due course they will follow these initial headlines with a full account of its findings ‘when practicable’.

If you are or have been a customer affected by poor experience with Global Restructuring Group and wish to discuss please contact Michael Slater at KBL Solicitors LLP on 01204 527777.