By Kam Sandhu @KamBass
Ahead of a debate on Thursday called by the All Party Parliamentary Group on Fair Business Banking, the organisation has called for transparency from RBS regarding their resolution and compensation schemes for businesses affected by the bank’s turnaround unit – the Global Restructuring Group – which was found to have deliberately extracted fees and assets from small businesses in a ‘Dash for Cash’ scheme in order to improve their own balance sheet.
The APPG are drawing attention to the need for a new dispute resolution system, stating previous ad-hoc schemes have been insufficient and can still leave the bank in a privileged position once a company has been deemed insolvent, regardless of whether the business was driven to this position because of the bank.
Chair of the APPG on Fair Business Banking and SNP MP George Kerevan said in a pre-debate statement;
“The APPG will be approaching the government to progress action to create a new, permanent redress system. At the same time, I welcome Mr Bailey’s assurance that the FCA will be seeking to embed transparency at the heart of system[s] of redress being created to deal with the fallout from the RBS/GRG scandal.”
“With confirmation that RBS must find another £2bn in capital, we are particularly concerned that, once again, businesses will bear the brunt of the Bank’s efforts to bolster its balance sheet. We will be watching this with intense interest and scrutiny. In particular, we are concerned with the sale of swathes of unregulated commercial lending to offshore, unregulated “vulture” funds. Outsourcing the function that GRG once served does not absolve the bank of its duty to its business clients. “
Kerevan also wrote to RBS CEO Ross McEwan last week, in an open letter calling for greater clarity on the proposals put forward by RBS for compensation, namely £400m – £100m of which would go towards ‘professional administration fees‘, and none of which would go to companies made insolvent.
Kerevan asked:
“To gain greater clarity of the position, can you please confirm the following points:
- What is the gross figure that RBS has calculated in terms of excess fees charged to all businesses that went through GRG between 2008 and 2013? It is important to clarify how much is being paid out vs how much the bank is able to retain due to the insolvency of its clients.
- What further actions, if any, does RBS propose undertaking to compensate those who have lost businesses to GRG?
- What steps will RBS take to ensure sufficient protection against foreclosure is provided to businesses engaged in the new complaints process?
- Can RBS explain why businesses who previously made a complaint to the Financial Ombudsman in respect of RBS behaviour are now being excluded from the new complaints process?
- What was the total number of businesses that went through GRG/BRG during the period in question and, of those, how many businesses went into a formal insolvency process?”
The Backbench Business Debate on ‘Creation of a Commercial Financial Dispute Resolution Platform’ will take place on Thursday 15th December at 11:30am in the House of Commons Main Chamber.
