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GRG White Paper: Overhaul of Complaints Review Scheme  March 24, 2017

Seneca Banking Consultants have called for a review of the Complaints Review Scheme in an open letter to Andrew Bailey, Chief Executive of the FCA, MPs and SME business owners, after discovering an unannounced change to the process.

The Complaints Review (redress) Scheme sets aside £400m for businesses affected by the Global Restructuring Group (GRG), Royal Bank of Scotland’s former turnaround division.

The unit targeted 16,000 UK businesses by charging extortionate fees, devaluing assets to then be resold to West Register (a vehicle of RBS), and driving many into bankruptcy.

The team at Seneca Banking Consultants uncovered an alarming change to the Complaints Review Scheme, which was made by RBS without any notification to applicants, or any advisory parties involved.

Lawrence Tomlinson, independent owner of the LNT Group, was appointed by the then UK Business Secretary, Vince Cable, to investigate problems SMEs were having with the Bank in relation to GRG.

Tomlinson responded to Seneca’s report, branding the compensation scheme a ‘cynical attempt at shutting up the critics’.

The White Paper sets out a critical analysis of the scheme which was announced by RBS in November 2016. The findings brought to light in the White Paper are as follows:

Engineering defaults

SBC found that RBS targeted companies who had lending secured against their assets, many of which were asset rich. The Bank may have engineered defaults which led to businesses being place into GRG, this was carried out by undervaluing assets, then declaring businesses in breach of their loan covenants.

Independence of ITP

The structure of the Bank’s compensation scheme lacks credibility as the initial compensation offer is made by employees of the Bank. This allows the Bank to play ‘judge and jury’ on themselves.

The appeals process is made up of one stage only which involves Sir William Blackburne who is the ITP (Independent Third Party), bringing to question the independence of the ITP.

If there is a conflict of interest between the ITP and the Bank’s employees, there is no alternative third party to turn to.

Treatment of appeals

Seneca recently uncovered that the Bank updated the principles in respect of the complaints process. Somewhat alarmingly the new principles have been updated to include the following:

If the outcome letter includes an offer, that offer will remain open for acceptance for 28 days from the date of the letter, after which, if not accepted in the meantime, it will lapse. It will also lapse immediately upon any appeal against a decision being made to the ITP.

Exclusion of Special Lending Services- (GRG’s predecessor)

Special Lending Services was established prior to the Global Restructuring Group, the accepted longer term goal was to turn SLS into a profit centre. It has similar hallmarks to that of GRG, and many businesses suffered at the hands of SLS prior to 2008 and the ‘relevant period’ (2008-2013) within the review.

Seneca Banking Consultants questions why this review cannot also cover the period from 2001 to 2013.

No recommendation to take specialist’s advice

The Bank explicitly states that customers complaining do not need a solicitor or third party to represent them. We know from our experience that these situations are often not straightforward at all, and create many complex issues for the complainant.

Often, without specialist advice, customers will receive less or no redress in comparison to what they would have received with professional guidance.

View the full white paper here.

Seneca Banking are campaigning against the poor treatment of SMEs crippled by the Global Restructuring Group. We have recovered £2.75m in GRG losses and £100 million in compensation for UK businesses.

If you think that you may have been affected by the Global Restructuring Group, call us on 01204 322805 or through our contact form.