More than 800 aggrieved companies have come forward to make their case againt RBS in a group legal action.
RBS’ controversial Global Restructuring Group turnaround division has been accused of damaging customers prospects for a profit. Folllowing a report in The Times, the campaign (called the “RBS GRG Business Action Group”) has appointed lawyers Clyde and Co. to examine their allegationations that RBS exploited and, in many cases, forced companies and individuals out of business.
The bank has been the subject of close inspection since then Government advisor Lawrence Tomlinson published a report last year describing instances where GRG had deliberately encouraged the failure of businesses through the use of extortionate fees.
Mr Tomlinson said:
“From the cases I have heard, it is clear that a perception has arisen that the intention is to purposefully distress businesses to put them in GRG and subsequently take their assets for the West Register at a discounted price. This needs to be addressed and the conflict of interest removed.”
He added:
“Now RBS is aware of this behaviour through my work, the work of Sir Andrew Large and the investigation by the Sunday Times, it’s time for them to look carefully at the processes and actions of this part of the bank. There are many devastating stories of how RBS has wrecked good businesses and the ruinous impact this has on the lives of the business owners.”
It has been claimed that RBS’ aim was to seize company assets from these forced failures through its West Register property division, though these accusations have been refuted by RBS.
A report from RBS, compiled by Clifford Chance, has rejected several of Tomlinson’s claims. This report, though, has been the subject of criticism for its narrow remit.
Investigations by the Financial Conduct Authority and Serious Fraud Office are ongoing.
Words: Peter Cribley