Businesses are still awaiting the publication of the independent report, commissioned by the FCA, into the treatment by RBS of customers in financial difficulties. The report is being carried out by Promontory Financial Group and Mazers and will look at alleged “poor practices” by the bank’s Global Restructuring Group (GRG). Claire Collinson Legal has advised numerous RBS business customers since 2010 on these issues. Complaints we have encountered include forced sale of assets, excessive charging of fees, unnecessary introduction of costly consultants, forced amendment to borrowing terms and requirements to enter into onerous Property Participation Agreements and ultimately, in some cases, premature insolvency proceedings.
Publication of the report is imminent. It was originally set for late 2015 but has been delayed. The FCA have the draft report. It is not clear what, if any, action the FCA will take as a result of the report but one possibility is that a Past Business Review may be set up to look at individual customer experiences and provide compensation within an agreed set of principles (similar to the Review carried out for Interest Rate Hedging Products (IRHPs).
In advance of the report’s publication, there are a number of steps businesses can take to ensure they are able to move forward promptly if such a review is put in place, or if it is not but a business wants to pursue a complaint:
- Locate and organise as much relevant documentation as possible to show what happened to the business (loan agreements, emails,letters, meeting notes etc)
- If you are an individual (rather than a Ltd company) make a Subject Access Request under the Data Protection Act to obtain your personal information from the bank
- Think about how your business has suffered financially, I.e. Start to quantify your losses and collect evidence to support this (invoices, bank statements etc)
- Prepare a summary or time line of the most relevant events.
There are a number of points of principle we recommend potentially affected businesses consider at this stage:
- Whether or not a formal review is set up, consider other methods of airing grievances. For example, over the last 6 years, CCL has had success for GRG customers (without exposure to excess costs risk) through the Financial Ombudsman Service (FOS), by raising complaints directly with the bank and by raising issues connected to GRG through consequential loss claims in the formal IRHP Review (for bank customers who were also sold IRHPs).
- Be wary of lawyers who advocate commencing litigation in relation to GRG complaints, without also advising on other options. A “poor practice” by a bank does not necessarily equate to a strong legal argument with good prospects in Court. Whilst some cases may be sufficiently strong to litigate, many will not, and could lead to a business being put at substantial and unnecessary costs risk.
- Properly research your options prior to appointing legal advisers. There are a number of ways solicitors can charge – hourly rates, fixed fees, Conditional Fee Agreements and Damages Based Agreements (DBAs). Make sure you find the right fee structure for your business. For example, firms offering DBAs will take a percentage of compensation recovered. In a formal review scenario, this may well lead to lawyers being paid far in excess the value of work done with no possibility of recovery of such fees from the bank. If compensation is provided by way of debt reduction, that charge would be due from the business without a compensatory payment from the bank for it to be deducted from.
- The FCA may advocate not using lawyers at all. This is certainly an option worth considering, but for businesses which prefer to have representation and / or advice, look for firms with specialist experience, ask who will be working on your case (qualified solicitors or unqualified para-legals) and look for previous client recommendations.
- Be aware of time limits. Different time limits apply to the different methods of resolving disputes; litigation, the FOS and opting into any formal review (if appropriate). A reputable and specialist solicitor will look at all of the available options and help to protect your business against expiry of these time limits. There are methods of doing this without incurring excessive cost.
- Finally, whilst the spotlight of the forthcoming report is on RBS, most of the major banks operated similar intensive management units to GRG. Customers of other banks who feel that they have encountered similar “poor practices” may well also have potentially valid complaints / claims.
Claire Collinson Legal has specialist expertise in banking / regulatory complaints and offers an entirely bespoke service, tailored to each individual client. We would be happy to discuss representing your business for GRG (or other intensive management unit) complaints on a no obligation basis. For more information, please contact Claire Collinson (01661 844185 or claire@clairecollinsonlegal.co.uk).
