Summary of FCA report into RBS's treatment of SMEs by their recovery unit GRG released

24 October 2017

The Financial Conduct Authority (FCA) has published an interim report into failings by The Global Restructuring Group (GRG), a division the RBS division that dealt with struggling businesses.

The GRG was found to have "widespread" mistreatment of customers in some areas.

The FCA report identified a number of failings, including that 92% of viable firms handled by GRG suffered "inappropriate action", such as interest charges being raised or unnecessary fees added.

FCA chief executive Andrew Bailey said: "We are investigating the matters arising from the [report] and are focusing on whether there is any basis for further action within our powers."

The bank has set aside £400m for compensation and paid out £115m, chief executive Ross McEwan said.

The most serious allegations that GRG deliberately tried to enrich itself by forcing distressed companies into insolvency so as to take over the assets at a knockdown price have not been upheld according to the report.    That said, by charging unnecessarily high interest rates and penalties on distressed businesses the resulting collapses must surely have been foreseen.

They would have known full well that as the secured lenders they would have had the “first bite of the cherry” as it were on the company’s assets. 

The report found the main areas of the divisions failings were.

  • A failure to support small businesses in ways consistent with good turnaround practice
  • Placing an undue focus on price increases and debt reduction without considering customers' longer-term viability
  • A failure to handle customer complaints fairly and to deal with certain conflicts of interest 

It also found senior GRG managers were encouraged to place "financial objectives first and emphasised the need for continuing financial performance". 

The RGL management group, which represents some former business customers of RBS, said 

"From what we understand, the FCA has failed to acknowledge the serious and deliberate harm caused to businesses through RBS' Global Restructuring Group," it said. 

"The FCA is making excuses in its interim report as to why it cannot bring the bank to justice, which does nothing to help redress the devastation inflicted on business owners by RBS."

If your business has been affected by the banks inappropriate behaviour then you can talk to us or if you feel you have a legal case against the bank then we can recommend that you speak to Lexlaw.co.uk who specialise in litigation of this sort.  Please see the below page for details

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