LIMITATION WARNING: Businesses that were or are affected by the restructuring or turnaround divisions of the major banks must urgently take legal advice on their specific cases. If you fail to do so your legal rights will become time-barred by virtue of the Limitation Act 1980, resulting in the complete loss of your legal right to compensation via the courts, which will be of the utmost importance if RBS do not pay adequate redress in their GRG review scheme. Legal rights can be reserved by instructing solicitors to agree a carefully negotiated standstill agreement or by issuing protective legal proceedings.
Our team of specialist bank litigation solicitors and barristers are assisting many UK SME businesses in obtaining redress compensation claims against the Royal Bank of Scotland’s Global Restructuring Group. GRG’s ‘business recovery’ activities were misrepresented as the team were in fact organised to profit from distressed customers in a dishonest, excessive and calculated way.
We accept instructions to manage both (i) the RBS GRG review that the bank has ‘voluntarily’ agreed to conduct with the Financial Conduct Authority (FCA) (which may result in a compensation scheme being announced) and (ii) litigation in the High Court. All GRG victims should note that that their legal rights will expire (to the satisfaction of RBS) unless legal action is taken to preserve these legal rights.
What is GRG?
GRG is shorthand for Global Restructuring Group, which was NatWest/RBS’s turnaround or business support unit (BSU) for troubled businesses. GRG was set up in the early nineties by Derek Sach and was formerly known as Specialised Lending Services. Following the credit crunch, GRG took control of 16,000 SME customers with assets of £65 billion. Following allegations of misfeasance and wrongful profiting, GRG was reportedly disbanded in August 2014 however, GRG was in fact re-branded as RBS’s Restructuring Group.
RBS GRG Misconduct: The Tomlinson Report
GRGs misconduct was exposed in the mainstream media as a result of the Tomlinson Report published on 25 November 2013 by the then entrepreneur in residence at the BIS, Lawrence Tomlinson. The report, titled “Banks’ Lending Practices: Treatment of Businesses in distress” highlighted the experiences of many of our clients who are litigating or have settled litigation against RBS.
Since the publication of the Tomlinson Report, GRG was said to have been disbanded by RBS on or around 8 August 2014 although we have evidence on many of our cases that RBS appear to have simply renamed the ‘Global Restructuring Group’ to the ‘Restructuring Group’ which operates from the same address as GRG and with many of the same staff.
RBS GRG Review: The Clifford Chance ‘Whitewash’ Report
RBS’ solicitors, Clifford Chance, claim in their so-called ‘Independent Review’ report that GRG did little wrong in spite of misrepresenting themselves as a business recovery division when in fact they were a team designed to take additional profits from businesses for the Bank, often on technical covenant breaches or engineered loan defaults.
“The Clifford Chance review of RBS’s treatment of distressed customers, principally by the Global Restructuring Group, was welcomed by RBS as finding “no evidence of systematic defrauding of business customers”. However, the review—overseen by a bank executive rather than an non-executive director—was not independent, was based on narrow terms of reference, and left a number of questions unanswered, such as why GRG could not explain the size of fees it had charged, and the accuracy of its asset valuations.” (Conduct and Competition in SME Lending Report)
RBS GRG FCA Review: Parliamentary Scrutiny
A Parliamentary Treasury Select Committee received written and oral evidence from senior RBS officials who gave misleading and false evidence that GRG was not an internal profit centre:
“This misunderstanding of the bank’s position by two senior executives is indicative of a systemic weakness of standards and culture. It is understandable, indeed right, that banks should seek to support businesses in difficulty with special measures but how that is done and whether the institution or the customer is the main beneficiary needs much greater clarity.” (Conduct and Competition in SME Lending Report)
GRG Review Compensation Scheme
Based on past experience of the RBS IRHP review scheme (also set up by RBS’ Mark Spurin and heavily cirticised in Parliament), we are firmly of the belief that any GRG review scheme administered by RBS is likely to avoid or minimise redress to customers wherever possible. Customers should not fall into the trap of believing that the review will be conducted or controlled by the FCA as regulator nor that this complex scheme will be ‘open, transparent or customer-centric’ as was falsely promised by RBS and the regulator in the past about their IRHP FCA Review scheme.
Many GRG victims will wrongly believe that the FCA are conducting the review; they are not. Customers may also believe that the FCA will take up their case and assist them; they will not. RBS will control and conduct the review. A skilled person will likely be described as an ‘independent reviewer’ and customers may believe they will have full access to this entity (likely to be a consultancy team at one of the big 4 accountants); they will not.
The GRG review will be conducted by the wrongdoing bank who will have to decided which cases deserve what level of redress. Many victims of IRHP swaps mis-selling who followed the RBS and FCA guidance that the RBS IRHP review was fair and customer-centric and did not require lawyer representation found quite the opposite was the case. Firstly, they were invited to face-to-face meetings only to be cross-examined by the bank (or by solicitors appointed by the bank) but could not even meet let alone question the bank’s salespersons who the bank’s review team also did not even speak to. Then followed months of delays as the bank planned out how to reduce redress it intended to offer. Many unrepresented customers were offered no redress at all or extremely poor redress by RBS which they were felt forced to reluctantly accept as their legal rights had expired.
Specialist FCA GRG Review Solicitors
Our bank litigation lawyers have a great deal of experience in dealing with all major banks, in particular RBS, and understand how bank recovery teams sought to profit from distressed customers.
Our team of bank litigators settled the largest publicly disclosed settlement of a derivatives mis-selling claim against a major bank and have, to date, issued more claims on behalf of businesses for swaps mis-selling than all other law firms in the UK combined. We ensured our clients obtained significant redress while many victims suffered low to no redress in the FCA review, often at the hands of RBS.
Unlike traditional law firms that do not have a mix of solicitors and barristers and prefer to avoid court work, we operate a parallel litigation and IRHP review scheme strategy wherever appropriate and in the best interests of each client.
Each case is specific and unique and our GRG Review legal team therefore offers a low cost initial consultation in order to provide legal advice on your specific case.
FCA Review: How GRG harmed customers
GRG purported to turn-around business customers that were in difficulty but in fact GRG was an internal RBS profit centre determined to generate extra revenue for the bank and also to reduce RBS’s loan book following the UK government bailout of the bank.
“The FCA is conducting its own review into GRG. It is important that this review comprehensively address the allegations against GRG, so that the public can be confident that any wrongdoing is identified and resolved.” (Conduct and Competition in SME Lending Report)
An interesting background feature of many cases where GRG was involved is that the customer only got into financial difficulties as a consequence of being mis-sold derivatives by another part of RBS (Global Banking and Markets). RBS, via GBM, mis-sold far more swaps and other complex derivatives to customers than any other major UK bank and many of these customers had cashflow crises created by RBS’ swaps mis-selling which GRG preyed upon to refuse lending, refuse drawdowns of existing lending and engineer defaults.
We have reviewed and are instructed on multiple RBS litigation cases where GRG seemed intent on damaging customers’ businesses by a systematic pattern of misconduct, including:
- squeezing the cash flow of the business by applying special management fees and charges;
- insisting on unnecessary but costly and bank-friendly management consultant reports;
- refusing valid drawdown requests to engineer a loan default;
- increasing the standard loan rates to higher loan default rates;
- applying a new higher interest rate, often LIBOR, to existing base rate loans (base rate was at an all time low of 0.5% since DATE);
- lending on or switching customers to LIBOR, a rate which RBS was manipulating, via its position as a rate setter, to a higher level;
- forcing customers, under threat of economic duress, bankruptcy and LPA receivership, to enter into a Profit Participation Agreement (taking a percentage of the shares in a business) or Property Participation Agreement (taking a charge over and a percentage of the future sales of customer’s properties).
RBS West Register: Stripping SMEs assets
RBS, via GRG or LPA receivers or by forcing the customers themselves, then engineered the fire sale of customer assets while, shockingly, RBS sought to profit from these sales via a subsidiary group of companies with the common moniker “West Register” which would demand assets or shares or profit participation via PPAs (or PPFAs – Profit Participation Fee Agreements) before often dumping the customer’s assets anyway. West Register, by December 2012 held property acquired from the bank’s UK SME customers totalling approximately £400m and made acquisitions at an average of approximately 50% of the original loan value at the date of the transfer to GRG.