What role did West Register play in the GRG scandal?

What role did West Register play in the GRG scandal?

The destruction caused by the Global Restructuring Group (GRG) was quick to hit the headlines in October 2016 after a series of leaks containing sensitive material was published by BuzzFeed News and BBC Newsnight.

The documents titled ‘Dash for Cash’ showed that Royal Bank of Scotland (RBS) systematically destroyed businesses through their former turnaround division by charging extortionate fees and aggressive restructuring.

Businesses were drained of cash and stripped of their assets – but how did West Register play a key character in the narrative?

What is West Register?

West Register was the division of the Bank which was responsible for buying and managing the assets of companies within GRG, essentially functioning as a property investment company.

As well as close association with RBS’s Global Restructuring Group, the property division was also tightly knit with RBS through mutual strands of leadership.

The Z Review recently published an article titled ‘The Murky Past of RBS West Register’ in which it disclosed that Derek Sach, head of the now-defunct Global Restructuring Group, was also a director of West Register. He stepped down from his role as director of West Register sometime before appearing in the House of Commons when he famously said that the GRG was ‘absolutely not a profit centre’.

Bully Banks, a campaign group for SMEs mistreated by the Banks, described Derek Sach as the ‘Last of Fred Goodwin’s trusty lieutenants’ who came under fire for the GRG scandal.

FCA report into the Global Restructuring Group

Firstly, The Financial Conduct Authority (FCA) commissioned a report into GRG in 2014 which is yet to be released, but the watchdog did publish a brief summary of the much-awaited report in November 2016.

In terms of West Register, the FCA summary found that,

  • there was no evidence that an intention for West Register to purchase assets had been formed prior to the transfer of the customer to GRG; and
  • there were no cases identified where the purchase of a property by West Register (as opposed to by another person) alone gave rise to a financial loss to the customer.

However, the FCA identified that widespread treatment arose from,

  • the failure to handle the conflicts of interest inherent in the West Register model and operation; and
  • the failure to exercise adequate safeguards to ensure that the terms of certain upside instruments in particular, Equity Participation Agreements, were appropriate.

Equity Participation Agreements (EPAs) were imposed by RBS which allowed the Bank to secure disproportionate equity stakes in customer assets, alongside increased charges and large ‘management fees’. In some cases, mis-sold EPAs even led to the failure and loss of the business itself – also known as ‘consequential loss’.

In April 2014, it was reported that West Register was to be wound up in response to the claims against GRG. The Z Review reported that ‘some of the West Register companies are being liquidated, others are going strong’.

Latest GRG Update – August 2017

RBS have substantially completed the refund of complex fees as part of the Complaints Review Scheme which was announced for GRG victims in November 2016.

However, The Times recently reported that RBS have just now turned their focus to the complaints stage of the process, as there are more staff members available now that the first stage has nearly been completed.

It was reported that just seven outcome letters have been sent by RBS out of 794 ‘eligible complaints’ received. One out of the seven cases have been forwarded to the Independent Third Party, Sir William Blackburne, who is overlooking the appeals process.

Read up on the full timeline of events surrounding the GRG scandal by downloading our GRG guide here.

Seneca Banking have long been campaigning for SMEs affected by the Global Restructuring Group. We have recovered £2.75 million relating to GRG losses and we have also recovered over £100 million in total compensation for clients.

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