Member Article

RBS refuse improved solution for GRG Victims

Royal Bank of Scotland have rejected to increase the initial compensation amount of £400 million set aside under the Complaints Review Scheme for businesses adversely affected by the Global Restructuring Group (GRG).

In February 2017, the Bank reported to have made a loss for the ninth consecutive year since the taxpayer bailout in 2008, £5.6bn of the total loss is related to mis-selling and conduct related costs, such as GRG compensation.

This is delivered under the Complaints Review Scheme, a redress programme for those affected by GRG, RBS/NatWest’s former ‘turnaround division’ for ailing businesses.

In late 2016, it transpired that GRG placed viable businesses under their control to secure as much return for the Bank as possible.

Aggressive debt restructuring, lack of transparency around fee structures, and debt for equity swaps (known as PPFA’s via West Register Investments – a vehicle owned by RBS) were just some of the ways businesses were driven into bankruptcy.

Seneca Banking Consultants, based in Bolton, has recovered £2.75 million relating to GRG losses and retrieving just under £100 million in total compensation for UK businesses.

This includes a handful of North West based business, such as a 40-year-old logistics and storage business, a Manchester based, property management enterprise and a software consultancy business which just celebrated 20 years in the running.

Seneca found that companies placed into GRG were often asset rich and were sometimes encouraged to sell assets at an undervalue, it was not uncommon for businesses to then become insolvent, eventually going into administration, then being dissolved.

Daniel Fallows, Seneca Director, said: “ the Bank’s compensation scheme doesn’t cover the large fraction of fees that businesses were forced to pay at the hands of GRG.

“SME’s are still being undercut and offered less than they are rightfully entitled to because the Bank explicitly advised that; customers complaining do not need a solicitor or third party to represent them.”

“This leaves room for RBS to mistreat businesses even within the review scheme.”

Head of the Treasury Select Committee, Andrew Tyrie, wrote to the Bank proposing that they offer a better solution to those who had been affected by the Bank’s actions and highlighted concerns for the Bank’s ‘solution’.

This was posted in Bdaily's Members' News section by Seneca Banking Consultants .