Was GRG under Government control?

Given the wide breadth of allegations that the Royal Bank of Scotland’s troubled turnaround division, the Global Restructuring Group (GRG), has faced over the years many may have thought that they had heard it all. This week has however seen the startling allegation that the tax payer owned bank was in fact taking instructions from a Government department in how it dealt with struggling businesses.

Following the Government bailout of RBS, a now former department of the Treasury, the Asset Protection Agency (APA), was responsible for insuring around £282 billion worth of loans granted by the bank. APA’s objective was twofold with their insurance in place to limit the potential losses that could be suffered by the recovering bank and also, as reported by the BBC, “to maximise the value of the assets in the scheme and reduce the probability of payouts”.

Court papers published in the ongoing case of Oliver Morley Estates, who are currently pursuing RBS for losses alleged to have been caused by GRG, suggest that the APA had a more hands on roll than would have been expected. It is suggested that the APA were in fact able to influence and guide the strategy of GRG in relation to customers and their financial arrangements.

In particular it is claimed that RBS was unable to release customers from secured loans without sign off from the APA. This provided them with the ability to veto attempts from customers to refinance their debts and will likely seem quite familiar to many who found themselves in the same position. This is key in the case of Mr Morley as released emails indicate that RBS was open to the idea of him refinancing his debt with alternative lenders, but the APA is alleged to have refused to let it proceed.

Mr Morley’s ongoing case alleges that his proposals had been blocked by the APA as they wanted his property assets to be bought by West Register, a property holding subsidiary of RBS, which has come under frequent fire during the GRG review.

As would be expected in such a scenario RBS states that it wholly denies the allegations that any of the published papers demonstrate that improper action was taken in any case managed by GRG. While it has provided an apology for the language used in internal emails it states that it will continue to defend the case vigorously.

Regardless of the outcome of this particular case, the main point that will endure throughout is the belief that those who allege their businesses were mistreated by GRG have still not been given the full story.

Although the GRG review scheme is now closed to new complaints those affected are still entitled to pursue complaints through the RBS’s internal complaint process. Discussions with the bank have resulted in confirmation that GRG related complaints will still be accepted and considered through to November 2019 though anyone interest is encouraged to do so as soon as possible.

If you have been affected by banking misconduct, then we are here to help. Seneca Banking Consultants are experts in the field, having recovered over £100 million in compensation for small and medium-sized enterprises. Please feel free to get in touch for a no obligation discussion on 01204 322 805.