The solicitors who investigated the Royal Bank of Scotland’s conduct towards small businesses are themselves now to be investigated.
As many will recall, when the RBS Global Restructuring Group (GRG) was thrust into the limelight following the publication of the Tomlinson Report, law firm Clifford Chance were appointed to carry out an investigation of conduct towards SME customers.
The report at that time effectively “cleared it over allegations that it forced small firms to close so it could make a profit”, as reported by the BBC in April 2014.
The report was, of course, welcomed warmly by RBS.
Subsequently, the Financial Conduct Authority later commissioned the Promontory report which revealed a very different view of conduct with GRG. In particular, it found an inherent conflict of interest between GRG’s goal of raising RBS’s income and its goal of assisting struggling businesses.
The stark difference in the findings of the two reports naturally left many wondering how this could have happened.
This wonderment led Clive May, a business owner who had approached Clifford Chance with evidence of GRG abuse, to refer the matter to the Solicitors Regulation Authority (SRA). Mr May had applied for an Equity Finance Guarantee loan through RBS. These loans had been designed to assist business who did not have sufficient security to offer the bank and were guaranteed by the government. When filling out the paperwork Mr May was advised to remove reference to a second home in order to qualify for the loan.
The agreement with RBS then led to the bank reducing his business overdraft by around 75% leading to restricted cash flow and causing the business to fail.
The SRA has this week now informed The Times that it is “likely” to begin an investigation into Clifford Chance over the allegation that it overlooked the evidence of fraud. If suspected of wrongdoing those involved could be fined or even barred from the legal profession.
For more information, download our free GRG guide.
If you have been affected by being part of GRG or been misadvised when taking out any form of borrowing, then please get in touch. Seneca Banking Consultants can be contacted on 01204 322 805.