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Background:
Global Restructuring Group ‘GRG’ was the name used by Royal Bank of Scotland for the internal team described as providing ‘business support’. The use of the words ‘business support’ is somewhat misleading, as the team actually managed the bank’s distressed and impaired customers (that had lending secured by property based assets).
After the financial crisis of 2008, new regulation aimed at strengthening the Capital Ratios of the UK bank’s meant that fees collected from the ‘GRG’ unit was actually offsetting its bad debts and improving the bank’s capital strength,thus the unit was seen by many as part of the solution to the bank’s weak capital structure.
A Report published on 25th November 2013 by entrepreneur Dr Lawrence Tomlinson and commissioned by the Business Secretary Vince Cable,’ accused RBS of destroying viable businesses in order to seize their assets.
Dr Lawrence Tomlinson summarised RBS’s overall process as being as follows:
Shortly afterwards the Tomlinson report, the FCA announced they had appointed Promontory and Mazars to carry out a review under section 166 of the FSMA 2000. The review will examine the treatment of small business customers placed into Royal Bank of Scotlands ‘GRG’ unit and look into allegations of poor practice set out in the Tomlinson Report.
Whilst the FCA was quick to announce a review, the report is still outstanding over 2 years later. Even with this delay, the FCA are still refusing to provide a timetable as to when the public will be able to learn about the findings.
The latest update from the FCA came at the beginning of October 2016:
“The FCA has now received the final report from the skilled person. There are a number of steps for the FCA to complete before we are in a position to share our final findings, which will include an assessment of all relevant material, of which the skilled person’s report is one. This has been a complex and lengthy review – it is, therefore, important that we do not rush the final stages of this process.”
We can only speculate what the contents of the report will contain, but given UK Government owns 71.5% of RBS, it is widely expected to be a whitewash, with a minimal chance of an IRHP type review scheme being set up.
Speculation is exactly that, but there is one potential area of concern for businesses that were or are affected by the restructuring division. Limitation Act 1980 imposes a time limit as to when you can claim for compensation. This countdown includes a 3 year limit from the date of knowledge. In theory, this could be argued as the release of the Tomlinson report on the 25th November 2013.
This potentially has serious implications and may result in the loss of legal rights to pursue a claim. We, therefore, suggest businesses affected to urgently seek legal advice on their specific case, as legal rights can be reserved by solicitors negotiating either a ‘standstill agreement’ or by issuing protective legal proceedings. Both can effectively ‘stop the clock’ for a period of time, allowing for full analysis of the FCA report when it is finally released.
Vedanta Hedging has worked with many experienced and credible Law firms from around the UK that specialise in these types of disputes. If you would like a referral, please contact us to discuss further.
To read more about these developments and see the latest damaging allegations published by Buzzfeed news, please click here.
