RBS launches £400m fund to refund GRG customers

Last month, BBC Newsnight and BuzzFeed News revealed that they had been handed documents showing the bank’s policy, known internally at RBS as ‘dash for cash’, meant staff could enhance their bonuses by appearing to help firms in debt but actually working behind the scenes to grab their assets on the cheap and push them further into trouble.

Now, while the City watchdog says it has found that RBS did not “artificially engineer” the transfer of customers to GRG, the bank says it has announced a fund of £400 million to redress affected firms.

After months of denials, RBS, which is already facing legal action over the scandal, finally said it had let some small business customers down in the past.

A group of small businesses have launched a £1 billion legal case against the Edinburgh-based bank claiming they were destroyed and asset-stripped by the GRG unit that was supposed to help and assist them.

The 140 companies signed up to the action say they were pushed into administration by RBS’s global restructuring group so the bank could use their assets to pay down its debts.

RGL Management Limited, the group gearing-up to launch a class action lawsuit against RBS over the conduct of the GRG, has said its numbers and value were likely to soar after the revelations were published in last month’s leaked internal documents.

Now, on the back of the FCA’s findings, the RBS says it will address any damage done to up to 12,000 small business customers through the conduct of the GRG between 2008 – 2013.

A statement from the bank said: “As the bank has acknowledged, in some areas, it could have done better for SME customers in GRG. Specifically, the bank could have managed the transition to GRG better and should have better explained to customers any changes to the prices or complex fees it was charging. The bank accepts that it did not always communicate as well or as clearly as it should have done. The bank also did not always handle customer complaints well.

“RBS notes that the FCA’s update confirms that no evidence was found that the bank artificially engineered a position to cause or facilitate the transfer of a customer to GRG or identified customers for transfer for inappropriate reasons and that all SME customers transferred to GRG were exhibiting clear signs of financial difficulty.”

RBS said the new complaints process will be overseen by Sir William in what it said was “a robust, transparent and independent step to the complaints process” and will provide SME the opportunity to customers who were in GRG to complain about their treatment or challenge the bank’s decision on a previous complaint should they wish to.

RBS chief executive, Ross McEwan, said: “We have acknowledged for some time that mistakes were made. Some of our customers went through what was a traumatic and painful experience as a result of the crisis. I am very sorry that we did not provide the level of service and understanding we should have done.

“Although the FCA review into the historical operation of GRG continues, we believe that now is the right time to deal with the areas where we accept some customers were let down in the past. I am pleased that with the agreement of the FCA, we are able to announce a new complaints process overseen by Sir William Blackburne, alongside an automatic refund of complex fees paid by SME customers who were in GRG between 2008 - 2013.

“The culture, structure and way RBS operates today is fundamentally different from the period under review. We have made significant changes to deal with the issues of the past, so that the bank can better support SME customers in financial difficulty whilst also protecting the bank’s capital.”