LEXLAW Solicitors & Barristers
The Financial Conduct Authority (FCA) announced a review into allegations against RBS’s Global Restructuring Group (GRG), following claims of unfair treatment of businesses during the credit crisis. The review focuses on whether GRG used aggressive tactics that led to unnecessary fees, the stripping of assets, and forced bankruptcies. This follows whistleblower revelations and reports highlighting GRG’s controversial practices.
A report by Sir Andrew Large criticises RBS’s Global Restructuring Group (GRG) for its treatment of SMEs in financial distress. The report highlights GRG’s operation as an internal profit centre with opaque decision-making and poor governance. Customers often face unsettling decisions without clear recourse, lacking funds or expertise to challenge the bank. Large calls for a forensic inquiry into GRG’s practices to address conflicts of interest and improve the treatment of distressed SMEs.
The Tomlinson Report accuses RBS and Lloyds of unscrupulous practices through their turnaround divisions. It found the banks deliberately distressed viable businesses, charging excessive fees to force insolvency and acquire assets cheaply via property divisions like RBS West Register. The report describes these actions as systematic and institutional, damaging SMEs.
The Court of Appeal dismissed Barclays’ appeal in the ‘LIBOR test case’ (Graiseley v Barclays), allowing claims that banks made fraudulent implied representations regarding LIBOR’s honesty to proceed to trial. The judgment rejects Barclays’ argument that there is no cause of action for failing to disclose dishonesty. The court held that banks proposing LIBOR-based transactions arguably represented the rate’s integrity. This ruling opens the door for LIBOR manipulation claims to be tried in court.
Directors disqualified for 18 years under the Company Directors Disqualification Act 1986 for selling but failing to deliver event tickets while continuing to trade insolvently. Lexlaw offers specialist legal defence for directors facing disqualification and guidance on court applications to act despite disqualification.
The Court of Appeal dismissed the Green & Rowley appeal against RBS regarding swaps mis-selling. The appeal failed mainly because the claimants abandoned their section 150 FSMA claim, likely due to mistaken limitation concerns. The court found no common law advisory duty beyond regulatory compliance in this case. The decision highlights the critical importance of correctly calculating limitation periods.
The Green & Rowley v RBS appeal, heard by the Court of Appeal, focused on whether RBS properly explained the risks of an interest rate swap product. The FCA intervened to clarify regulatory rules on swaps mis-selling. The claimants’ decision to accept the section 150 FSMA claim as time-barred weakened their case. The judgment highlights the critical need to correctly calculate limitation periods and thoroughly manage these complex claims from the outset.
The FCA Swaps Review has faced significant delays since beginning in April 2013, frustrating many affected businesses. Latest FCA data reveals that only 50% of sophistication assessments are complete, 3.9% of cases have reached interviews, and 2.6% have had payments suspended. Delays risk customers losing legal rights due to the six-year limitation period. Concerns exist over banks bypassing the sophistication stage while fairness issues arise over banks self-assessing their mis-selling.
The Parliamentary Commission on Banking Standards’ Final Report calls for radical reforms to restore banking trust, addressing LIBOR manipulation and derivatives mis-selling. Key proposals include criminal liability for reckless bankers, improved governance, stronger regulator duties, and wider access to the Financial Ombudsman Service for small businesses. The report urges greater financial literacy, transparency, and regulation to prevent banks from disclaiming advisory responsibility when selling complex products.
The Times Newspaper reports that banks are secretly settling swaps mis-selling cases with small businesses, often on the eve of court proceedings. These settlements are kept confidential, and the banks often make public statements denying wrongdoing. The number of claims is increasing as businesses become aware of the issue. Businesses argue that the swaps were too complex and that banks failed to explain the risks involved.