RBS Global Restructuring Group (GRG) Unit: Is Your Business Affected?

Year Published: 2018

If your business was with RBS bank prior to 2013, it could be eligible to make a claim, if it was placed into their Global Restructuring Group (GRG).

Did your business bank with RBS prior to 2013?

A number of companies will not even be aware that they were in the GRG unit so any business customers who were with RBS between 2008 and 2013 should check.

Anna Barnes, Partner and Head of Dispute Resolution at SAS Daniels LLP

Anna Barnes, Partner and Head of Dispute Resolution

An investigation found that some businesses in the GRG were subjected to inappropriate treatment with the bank prioritising price increases and debt reduction over the long term viability of customers.

RBS has reportedly set aside £400 million for compensation and as of January 2018, only approximately £115 million had reportedly been allocated. We believe that many businesses could have a case for compensation but are not aware.

There is an automatic refund scheme in place which means RBS will proactively contact some customers who are eligible for money back, however this only relates to the refund of certain prescribed fees. Businesses can apply for further compensation, but must take action now and apply for this before time runs out.

Timeline of the RBS Global Restructuring Group (GRG) Unit:

November 2013

The Tomlinson Report is published.

Dr Lawrence Tomlinson published a report called “Banks’ Lending Practice: Treatment of Businesses in Distress” ( also known as the Tomlinson Report).

The Tomlinson Report raised concerns in respect of the treatment of SME customers when they were in RBS’s GRG.

The Tomlinson Report led to the Financial Conduct Authority (the FCA) appointing Promontory to conduct an independent review of the treatment of RBS GRG customers under Section 166 of the Financial Services and Markets Act 2000.

November 2016

The Promontory Report was completed. The FCA issued a statement from the report but declined to publish the full report.

RBS set up automatice refund of fees and Complaints Review Scheme.

The FCA set out a summary of the findings of the Section 166 Report which included reference to:

  • Widespread and systematic inappropriate treatment of SME customers in GRG;

  • Poor and misleading communications;

  • A failure to support SME businesses in a manner consistent with good turnaround practice;

  • Placing an undue focus on pricing increases and debt reduction without due consideration to the longer term viability of customers; and

  • Failure to ensure that Equity Participation Agreements were appropriate.

The FCA declined to publish the 166 Report but its contents led to RBS setting aside £400 million to compensate GRG customers by way of:

  • An automatic refund of fees; and

  • A Complaints Review Scheme overseen by Sir William Blackburn (a retired High Court Judge).

January 2018

 

The bank reported that refund offers of £115 million had been made.

February 2018

The Treasury Commitee published the Promontory Report.

In February 2018, the Treasury Committee published the Promontory Report on the basis that it was “overwhelmingly in the public interest to do so”. The FCA had still not done so.

What are the allegations against RBS and the GRG unit?

It has been reported that the businesses would usually be moved into the GRG unit following a review of the business and/or the existing facilities and security.

Once the businesses were in the GRG, RBS would reportedly impose new lending terms including:

  • Higher interest rates (including interest rates sometimes referable to LIBOR);
  • Higher monthly management fees;
  • Significant arrangement fees for the new lending terms;
  • Property participation agreements with RBS’s property subsidiary known as West Register; and
  • Equity participation agreements.

What can SAS Daniels LLP do for SMEs Affected?

If SMEs were in RBS’s GRG unit between 2008 and 2013, we can review the Facility Agreements, Property Participation Fee Agreements, Equity Participation Agreements, and all relevant correspondence between the customer and the bank. We can also help SMEs by:

  • Providing guidance and advice through the Complaints Review Scheme and any claim for consequential losses;
  • Considering any fee refund offer and applying to restore the company to the register (where necessary) in order to make a complaint/claim for consequential losses and/or accept an offer for a refund of fees; and
  • Considering whether the business has a claim (arising out of RBS’s treatment of the business) for:
    • Breach of contract;
    • Breach of duty of care;
    • Misrepresentation; and
    • Breach of statutory duty.

RBS have recently announced that the deadline to apply for compensation is Monday, 22 October 2018, so time is of the essence. Businesses also need to bear in mind the Limitation Act 1980, which contains prescribed time limits for bringing court proceedings.

For more information on the RBS Global Restructuring Group compensation, please contact Anna Barnes in our Dispute Resolution team on 0161 475 7655.

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