The financial crisis of 2008 may seem like a long time ago, but many people, small business owners such as independent high street retailers and property developers in particular, are still suffering the after effects of seeing their businesses ruined.
There are question marks over whether, in an economic period characterised by credit defaults and financial difficulty for individuals and small businesses, the Royal Bank of Scotland was making things worse rather than better for some borrowers. A webinar to be held tomorrow (Wednesday September 28) by Berg, a law firm representing a legal case against RBS, is likely to shed light on the impact of the bank’s actions during this time. Alison Loveday, of Berg, the Manchester-based firm, explains below.
GRG: Have you been affected?
The Global Restructuring Group (GRG) was a controversial restructure division set up by the Royal Bank of Scotland in the 90s. The intentions of the group were said to be to support distressed businesses, helping to turn them around. In actual fact, many industry experts believe that GRG put these businesses under additional stress and as a result many were forced into insolvency.
So what happened? Insiders believe that putting these businesses in a difficult position allowed the bank to extract additional fees and sometimes allowed another division of RBS, West Register, to purchase these businesses at a discounted rate.
RBS outright denies these allegations and has cited that they did not deliberately defraud customers. The Financial Conduct Authority (FCA) is currently investigating the claims in an independent Skilled Persons Report, called a Section 166 report.
What will the FCA’s Section 166 report include?
There have been no promises as to what will be included in the report. Over the past 2 years, the Section 166 report has been delayed numerous times and it’s still unclear when it will be published. Andrew Bailey, chief executive of the FCA, told MPs in July 2016 that he was hoping the report would be published later this year.
What will it mean for RBS?
If RBS are found to have at fault they could not only be faced with paying billions of pounds in compensation as a result of their actions, but their reputation will also be damaged further.
It is possible that a compensation scheme will be launched to help the businesses affected, however, this is by no means guaranteed. Should the report come back with no recommendations for a compensation scheme, businesses could end up with nothing.
What should RBS be doing?
Earlier this year, the RBS appointed a PR agency to help turnaround its reputation, following on from the numerous fines and mis-selling scandals, including the ongoing impact of the GRG.
What’s important for RBS right now is to apologise, come clean about what they have done wrong and make proper amends to the people who have been directly affected by GRG. It’s crucial that RBS provides meaningful assurances, showing that they realise the error in their ways and demonstrating that they have implemented real changes to make sure it doesn’t happen again. Only by doing so can they begin to turnaround their reputation.
Have you been affected?
If you’ve been affected, there is plenty that you can do. Firstly, if you’re been affected by GRG, it’s important to seek out legal action to fully understand your position as soon as possible
Businesses are being encouraged to have their case assessed now before the report is published. If the report comes back with no recommendations regarding the setting up of a compensation scheme, the likelihood is that businesses will find themselves without any right to pursue action through the courts, particularly if the limitation date (the date by which legal proceedings would have to be issued) has expired.
On Wednesday 28th September, berg will be holding a webinar examining the activities of GRG, the current state of place, and what the future may hold. As legal experts in this field, the law firm will provide crucial advice for those who have been directly affected, including what options are available.
For more information on GRG, sign up for the webinar and take a look at berg’s website.