RBS faces claims for £1bn in damages from small businesses
Legal action against Royal Bank of Scotland gathers pace as 50 claimants accuse bank of pushing firms to bankruptcy for profit
Small businesses alleging that Royal Bank of Scotland drove them to the wall for its own profit are to lodge claims worth more than £1bn against the bailed-out bank after securing legal and financial backing.
RGL Management, formed to gather claims against RBS over the conduct of its now defunct Global Restructuring Group, is understood to have processed 50 claimants less than a month after its launch.
The group has also secured legal representation from Humphries Kerstetter, which has previously acted for Tesco and WH Smith in a suit against credit card companies. Claims within RGL Management are expected to exceed £1bn as the group prepares for a marketing push to sign up more firms.
“We believe this has the potential to be a huge claim,” said James Hayward, its chief executive. “Single businesses within our group have losses of tens of millions of pounds and thousands of businesses suffered as a result of GRG’s actions. The rate at which we are being contacted by businesses suggests our claim will be very significant.”
Legal action against RBS is gathering pace even as City regulator the Financial Conduct Authority prepares to publish its report into the GRG unit, set up to help struggling businesses.
The allegations about GRG gained publicity in 2013 when a former government adviser, Lawrence Tomlinson, published a report arguing the RBS division drove clients to the brink so the bank could buy their properties and make a profit. An FCA report on Tomlinson’s accusation is expected to be published within weeks.
RGL Management said it was looking to swell the ranks of former GRG clients seeking redress before a courtroom fight that was likely to be met by a fierce defence from RBS. It is expected to try to poach some of the more than 400 businesses that have joined the rival RBS Business Action Group.
“This is about making people realise that there is a vehicle through which they can claim,” said Hayward. “We are funded, we have lawyers ready, we’re investigating and processing data and if people think they have an issue they should come and talk to us.”
RGL will use funds provided by professional litigation investors to seek fresh evidence from whistleblowers and through other investigative means.
RBS, which is scheduled to publish its quarterly results this week, said it would defend the claims. “We believe we have a strong case and will defend these claims vigorously,” a spokesperson said.
One claimant, Nigel Henderson, said RBS pushed his hotel business into bankruptcy. He claims the bank would not let him pay off a mortgage on a hotel he owned with the £800,000 proceeds from a previous hotel sale. Henderson says GRG told him to pay £240,000 to extricate himself from the mortgage but would not then let him use the £800,000 to do so.
RBS’s alleged refusal to cooperate left him saddled with huge mortgage payments that meant he was unable to continue doing business, he claims. The bank eventually petitioned for his bankruptcy and Henderson is claiming for losses “in the millions” of pounds.
“They took everything from us, including our house. We were evicted,” he said. “What happened to us and thousands of other people is a travesty of justice and symptomatic of the greed displayed by the senior management of RBS, who had no interest in anything other than self-aggrandisement.”
View the article on the Guardian website: RBS faces claims for £1bn in damages from small businesses