RBS GRG compensation scheme called out by leading commercial lawyer

One of Scotland’s leading legal authorities on banking misconduct has said only a tiny fraction of the businesses affected by the RBS Global Restructuring Group scandal are likely to ever have any real prospect of compensation due to the extraordinarily stringent rules the bank has applied to the process, The Herald reports.

Cat MacLean, a partner at MBM Commercial, shared her criticisms with Sir William Blackburne, the retired High Court judge installed as the independent arbiter of the scheme set up by Royal Bank of Scotland to compensate victims of the notorious GRG.

Last year, RBS said it had set aside £400 million to compensate owners of small businesses in the controversial GRG unit – 16,000 firms at its peak.

Businesses were told the division was a turnaround specialist for stricken firms, but it has since been accused of deliberately stripping the assets of those businesses for its own profit and forcing them into bankruptcy.

While the bank has said it is automatically refunding some fees charged to some customers, it has stopped short of admitting liability for any business going bankrupt, and firms demanding additional financial restitution will need to prove their losses were a direct result of the bank’s actions.

The rules imposed by RBS to the process mean only handle complaints from “the officials of the company presently appointed and listed at Companies House” can be considered.

Ms MacLean, who set up MBM Vertitas last year alongside Edinburgh financial advisory firm Veritas Treasury, has highlighted the absurdity of this by noting that 93 of 100 business that went into GRG “didn’t survive”.

She added: “That means we have a scheme that only works for about seven per cent of all the businesses that went through the GRG. Of that seven per cent another significant percentage are excluded because some of the fees were levied from them after 2013.

“The scheme will therefore only look at something like five per cent of all the businesses in the GRG and that’s before you look at how many they will find in favour of. If they find in favour of 50 per cent of the claims they are willing to entertain – and that would be a very high percentage – then in fact they will be compensating just 2.5 per cent of the total number of businesses that were washed through GRG.”

She said MBM Veritas would be writing to Mr Blackburne “to see if he’s aware that he’s only entitled to consider such a small number of claims”.

Lord Cromwell, co-chair of the all party parliamentary group on fair business banking, added that the scheme is not fit for purpose.

He said: “The 92 per cent of businesses worst affected by the actions of GRG have no hope of any compensation via the scheme, which itself holds no credibility with either the public or within Parliament.”