On this page you will find the following:
- What is GRG
- Global Restructuring Group (GRG) Automatic Fee Refund
- SME GRG Complaints’ Process
- What Do SMEs Need To Do About This?
- What Do SMEs Need To Do About This?
- Six Year Limitation Rules & Exceptions
- Post Complaint Process
- How can we help?
We have extensive experience advising on claims against major high street and international banks. As a litigation only firm we have no conflicts with any finance providers, brokers or banks.
What Is GRG?
GRG is a division of RBS created to handle small to medium sized businesses who had loans with RBS and who RBS claimed were in financial difficulties or likely to be in financial difficulties in the near-future. To combat the financial difficulties RBS, through GRG, imposed substantial fee increases and sold the customer’s assets to help repay debt.
The allegations of misconduct originally came following the publication of a report by Lawrence Tomlinson in November 2013 (the Tomlinson Report), as entrepreneur in residence at the Department for Business, Innovation & Skills. Mr Tomlinson, amongst many, many other things, had a care home group funded by RBS loans which had been put into GRG.
The Tomlinson Report alleges that in some cases, businesses were forced into GRG through trivial or technical breaches, even if those businesses were not in financial distress. When in GRG, RBS had the authority to impose high interest rates and fees on businesses which, in some instances, resulted in the business going into administration or the business assets being liquidated to settle outstanding bank debt to RBS. RBS has now agreed to start refunding some of the fees imposed (see below).
Further, it is also alleged that in many instances RBS acquired assets of distressed businesses at substantially below market value, with those assets being allocated to a separate property arm of RBS called West Register*.
Following publication of the Tomlinson Report, RBS commissioned its own report which (unsurprisingly) found that there was no evidence of wrongdoing on behalf of RBS/GRG. That report did find, however, that GRG staff appeared to be incentivised to negotiate more onerous terms for businesses in GRG, using the withdrawal of funding (or threat of withdrawal of funding and/or administration) as a lever to get customers to agree to additional fees. This appears to have been partially up-held by the FCA’s own inquiry into GRG.
In light of the complaints raised by the published reports – and a growing number of complaints being directed at GRG handling of small and medium sized businesses – the Financial Conduct Authority (FCA) commissioned a review of the alleged mistreatment of business customers by GRG. This report took two years to complete and has resulted in a new scheme specific for GRG customers (see below).
(*”West Register” actually refers to a group of companies, many of which formerly had “West Register” in their name, but RBS changed their names following the allegations in the Tomlinson Report. They were called West Register because they were situated near a street in Edinburgh called West Register)
Global Restructuring Group (GRG) Automatic Fee Refund
As part of the FCA’s findings RBS has agreed to refund to customers some of the more exotic fees imposed on GRG customers. These fees will be automatically refunded, and GRG customers need not do anything. This process will be undertaken by RBS staff under the supervision of an independent arbiter, who is a former Judge. His decisions are final and binding.
RBS and the FCA have publicly stated that the fees will be automatically selected and refunded. The fees include Property Participation Fee Agreements, which has delighted practitioners. The fees to be refunded are agreed between RBS and the FCA, so there need be no submissions on behalf of the bank’s customers who will be advised in due course by RBS what fees are being refunded.
SME GRG Complaints’ Process
In addition to the refund of fees, RBS has set up a new complaints’ process for GRG customers. Under this process the SME can make a formal complaint about how they were treated in GRG. This is in addition to the normal litigation rights and the ability (if available) to complain to the Financial Ombudsman Service.
What Do SMEs Need To Do About This?
The fees are going to be selected by RBS, who will write to the customer and advise what fees are being refunded. It is likely that as part of this process RBS will require the customer to sign an acceptance form. It is imperative that if you consider you have a claim against RBS over-and-above the refunded fees that you ask a solicitor to review the acceptance form (which is an agreement and as such is contractually binding). Whilst we have every faith in the independent arbiter, we have a very healthy scepticism of RBS and consider that there is at the very least a possibility that RBS may try and arrange for such customers to sign away any rights to sue RBS if they possibly can.
If you sign an acceptance that says (for example) that you are accepting the refunded fees in full and final settlement of any and all claims whether known or unknown, against RBS and its subsidiaries, you will be held to that agreement by a Court. You would find, upon signing that document (if such a document is issued – which at present is not known), a Court would hold you to the terms of it. That is because you are a business and you are expected to act in the best interests of the business, which includes seeking legal advice if it is needed. Failing to get legal advice will not in any way invalidate the agreement. It is highly unlikely that a court would waive the agreement, even if you can prove that you did not know at that time that you had a claim against RBS or any of its subsidiaries (hence why it now always says “claims whether known or not known”).
Please call Muldoon Britton to discuss this: 01691 826 6922.
Six Year Limitation Rules & Exceptions
Following the refund of fees, if you believe you have a claim against RBS/GRG, it is imperative that you use both the new complaints’ process and the Courts, if that is available to you. If you issue a complaint to RBS under the terms of this process, you should ask a solicitor about seeking a standstill agreement to stop time running on any court claim. If you do not and you had time running, it seems quite likely that RBS could potentially keep you tied up in the complaints’ process until your time has ended and you cannot complain to a Court. This does not apply if the six-year limit passed prior to you embarking on the complaints’ process.
Time in regards to a claim against RBS for abuses in GRG should be calculated in the first instance as being six years from the date that you were advised you had been moved into GRG. If this has passed, you may consider it to be six years from the date at which RBS removed/suspended/altered your existing lending and/or imposed new lending. Past that date a claim would be very difficult if not impossible.
There is an exception, which is an additional three years for a negligence claim, if the negligence was hidden. Muldoon Britton expects that date to run, for everyone, from November 2013, and as such elapsed in November 2016, if such an exception were available. That is the date of the Tomlinson Report. A Court looks at what a reasonable director/business person would know, so arguing that you were unaware of the Tomlinson Report is unlikely to move a Court to make an alternative finding. The report was reported on the front pages of every newspaper, and a Court is thus likely to find that even if you did not know of it, you had constructive knowledge of it.
There is a suggestion that you could also argue six years can run from the date at which your first found out about fraud or deception. Fraud is exceptionally difficult to argue, and you could only argue fraud or deception if you had good evidence of it. However, this is a technical argument. It is from the date at which you reasonably could have known and not the date at which you actually knew for sure. We would therefore suggest that this may run from November 2013 for a period of six years. This will only apply to those parties that can evidence (not just allege, you must evidence it) fraud on the part of RBS and its employees. Solicitors and barristers are prohibited from alleging fraud/deception unless there is apparent evidence of fraud. At present, despite the view of GRG, there has been no evidence of conduct that crosses the line into fraud. We appreciate that what you have been through appears to you to be fraud, but an outcome that appears to be fraud is different to fraud being evidenced. Speak to a solicitor as a matter of urgency.
As such, you should consider your six year period as the most appropriate time to issue a claim in Court or agree a standstill agreement. This should run from when you were moved into GRG. It is unlikely that RBS will remind you of this, and there were suggestions amongst practitioners in the IRHP Review that some banks purposefully (or appeared to be purposefully) delaying responding to a complaint until shortly after the six year period had elapsed. RBS would prefer that you do not sue them, but there is no actual evidence that they have purposefully let time elapse, but you the customer should ensure that you are fully aware of what dates apply to their specific case and you should consult one of Muldoon Britton’s solicitors about how to protect your claim.
The complaint that you submit should really be drafted by a solicitor. We found, often, in the FCA’s IRHP review that customers missed the legal and regulatory issues when making their own submissions. This resulted in no refunds or substantial alternative products. It is our experience that those who invested in their claims were repaid dividends through settlements that other firms did not achieve.
We appreciate that having been in GRG, costs are an issue. However, saving on fees and drafting your complaint yourself may have the net result of you obtaining little from RBS. Is it better to have paid and been repaid with a full settlement or to have saved those fees and obtained a minimal or no settlement outcome? See our article At Least You Saved On Lawyer’s Fees
Muldoon Britton is a litigation only firm. Our principal aim in our daily work is to frame arguments that will persuade a Judge to find in favour of our client. That is the very essence of the service we sell. Modesty notwithstanding, we are very good at forming and framing arguments. That is why we are a successful firm. All of the UK and US lawyers have been working on complaints about and against RBS and other banks for in excess of a decade. We know what arguments work and what do not. A very good example is in the IRHP Review. Customers drafted complaints to prove “mis-selling”. Muldoon Britton’s lawyers all knew that there is no such thing in English law as “mis-selling”. Investing in your claim and using highly specialised banking litigation lawyers pays dividends. We cannot give you a guarantee, but if you have a genuine claim, we can frame the complaint to ensure it is optimal, whether for the complaints’ process, FOS or the High Court.
Post Complaint Process
If you do not have your case satisfied by RBS in their in-house complaints’ process you may consider issuing a claim in Court (subject to limitation – see above) or a complaint to the Financial Ombudsman Service.
If your case is time barred (that is, you waited and the six year period passed without you issuing a claim) there is a potential ability to sue RBS for not undertaking the process properly. This is known as a Suremime claim, and the Court of Appeal is making a decision on Suremime Claims later in 2017. The hearing is set for June 2017, but it is impossible to know when the judgment will be out. Keep an eye on Muldoon Britton’s news page.
If your case is not time-barred, then it may be possible to issue a GRG claim against RBS. These claims are much, much harder than previous complaints. Bank lending and GRG itself are not regulated. The findings of Her Honour Mrs Justice Asplin in Property Alliance Group Ltd v RBS  EWHC 3342 (Ch) has made a GRG claim in court difficult. Mrs Justice Asplin rejected PAG’s entire GRG claim. It is essential that the findings in the PAG case are considered when drafting any GRG claim against RBS. Ensuring that all heads of claim are fully considered is essential, which is why using a law firm with a substantial history of litigation against banks is very important. Using inexperienced legal representation can be problematic. A very optimistic lawyer or claims management agent is no substitute for a battle hardened solicitor who has fought against banks for over a decade.
The Financial Ombudsman Service may also be considered. You must have nine or fewer employees and have an annual turn-over of less than €2 million. The nine employees and the turnover is the total combined of all connected businesses. Connected is a very complex term, but in its broadest sense, any shareholder or director with a 25% or greater holding in another company links those two companies. So, if Mr A owns 100% of the shares in A Limited, and has 26%of the shares in his brother’s company, B Limited, but he has no connection to the company other than shares results in both companies, for the calculation, being classed as the same for the purposes of calculating the nine employees and €2 million turnover. So if A Ltd has nine employees and B Ltd has three employees, you have 12 employees (for the purposes of the FOS calculation) and as such are incapable of making a complaint to FOS.
FOS has a six year rule. However, as with the IRHP Review, your complaint to FOS would be that they did not act fairly (or related arguments) in undertaking the complaints’ process, and as such the six year rule runs from the date of your final decision.
You cannot issue proceedings in court and go to FOS at the same time, normally. It is possible to agree a standstill agreement and go to FOS. It may also be possible to issue a claim form and seek an agreement not to serve it & the particulars of claim until after a FOS determination. However, that is exceptionally complex and you should not do this unless you have solicitors and barristers assisting you in making such decisions. You could potentially ruin both the FOS complaint and the Court complaint if you do this wrong. Seek advice.
As with the complaints’ process, we would urge you to consider investing in legal representation to make your complaint to FOS. This is much more so if you expect to issue proceedings in Court afterwards. There could be costs’ consequences if you do not fully argue all aspects of the case at FOS and then seek to argue the full set of arguments in court. There potentially could also be costs’ consequences if your FOS complaint is drafted poorly and RBS argues in Court that you could have succeeded at FOS if you had only used a lawyer to draft your complaint. Again, as noted above, saving money on lawyer’s fees could result in you not receiving all of the damages that you potentially could have done makes such a saving worthless. We have had one case that sought to save on lawyer’s fees and lost a multi-million pound claim in its entirety because of it (they became time-barred, which they would have known about had they instructed a lawyer. One month after time passed they got a full rejection from the bank. They then – after getting the rejection – sought advice, by which point it was too late. Their entire claim of £1.5 million, all of it, had been lost for the sake of saving £3,000 + VAT on a fee to have their case reviewed).
How can we help?
If you believe you have a claim against RBS we urge you to seek advice from Muldoon Britton before you embark on the RBS complaints’ process, Financial Ombudsman Service or Court. A review by one of our experienced solicitors can tell you what you need to know about the strengths of your case, weaknesses of your case and the all-important time bars that apply to your specific case. Saving money on such advice before you get started can have the unfortunate outcome of you not settling your case for what it is worth, and in worst case scenarios, losing your claim in full.
At Muldoon Britton we will charge a fee to review your case (subject to size of your case). After the review, we can discuss with you the best options for obtaining favourable outcome and what fee arrangements may be available to you. Fee agreements are different for people with different cases and their desired outcome. It may be appropriate for you to agree to pay fees as you go, it may be appropriate to agree a partial funding arrangement, it may even be possible to agree a Contingency fee, Conditional Fee or damages Based Agreement. Every case is different.
Please do remember that if you save money on lawyer’s fees you may lose out on a settlement. In law, you often get what you pay for. Muldoon Britton must charge you to review your case because we review cases properly. That takes a long time, and until we know what case you have and what your desired outcome is, we cannot agree a funding arrangement. Many GRG customers will be using their automatic fee refunds to help fund a GRG claim.
For a no obligations discussion, contact us on 0161 826 6922.