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BBC obtains leaked FCA report on RBS’s GRG unit

Ross McEwan - RBS GRG unit

A leaked FCA report, claims 92 percent of companies which entered RBS’s GRG unit were mistreated in some way, through policy or procedural breaches.

Vedanta Hedging has advised many businesses who have been forced to enter the GRG unit, due to mis-sold interest rate swaps. In the recent news, RBS settled a swap/GRG claim worth £669m  against our client, Opal Properties

Mr Abhishek Sachdev, CEO of Vedanta Hedging, has also been interviewed on Sky News regarding the delay in the FCA Review of RBS’s GRG unit. He discussed, how the GRG scandal could cost RBS tens of billions due to the size of some businesses affected. The GRG unit did not just impact SME’s, but also many large businesses; including care homes and hotels.

To learn more, please watch our webinar on the GRG scandal and mis-sold interest rate swaps here.

What is the GRG unit?

Natwest and RBS’s Global Restructuring Group was a business support unit for troubled businesses. The stated aim of the GRG was to put companies into intensive care to turn them around, and to restructure their debts if necessary. The unit operated from 2005 to 2013 and at its peak dealt with 16,000 companies.

The study was commissioned by the FCA almost four years ago, as part of its investigation in the GRG unit. Despite being completed some time ago, the regulator refused to publish its findings.

The report was leaked to the BBC, which reported that 10 percent of the companies in the GRG returned intact to the main bank. Small and medium-sized companies placed under the supposed care of the global restructuring group almost all suffered from some form of financial abuse, whether it be raised borrowing costs or an increase in their fees, the FCA has found.

More than 90 percent of firms in the RBS GRG scheme, set up to help struggling companies are understood to have suffered “inappropriate action” against them by the bank. The leaked FCA report, claims 92 percent of companies which entered the Global Restructuring Group were mistreated in some way, either through policy or procedural breaches.

The BBC reports that “as of the end of 2014, 69% of firms were still in the successor to GRG, which was supposed to return them to health.”

The leaked report calls for a fundamental review by RBS of how it handles its SME customers in financial distress.

The FCA has apparently admitted that it may, in fact, lack the powers to take action when SMEs face mistreatment: “The activities carried out by GRG are largely unregulated; therefore, the FCA’s powers are limited in this area.”

“However, we are investigating issues raised by the Report which falls within our remit.”

RBS has previously admitted that it “could and should have done better” for SME’s assigned to the GRG scheme. Highlighting that it could have managed the transition of small businesses from the main bank to the GRG better and explained more thoroughly “any changed to prices or complex fees” GRG charged.

If you would like to find out if you have a GRG claim, please contact us and one of our specialists will be able to assist you. Alternatively, you can call us on 0207 183 2277.

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