The Royal Bank of Scotland is facing a group legal action from hundreds of business owners, it emerged today.\u00a0<\/p>\n
The group legal action, comprised of business owners from small and medium-sized companies, is centred upon the bank\u2019s \u2018turnaround\u2019 division, the Global Reconstructing Group (GRG).\u00a0 It is alleged that the group exploited businesses through applying exorbitant fees to their services and undervaluing company assets, delivering many to the brink of collapse.<\/p>\n
The allegations were first published last year in a report by Lawrence Tomlinson, a former government adviser.<\/p>\n
The class action case is being orchestrated by the RBS GRG Business Action Group, which has appointed the law firm Clyde & Co to review the allegations.\u00a0 The group has said that 800 companies have so far come forward for consideration, and 200 cases were being reviewed in detail with a view to form a group litigation case.<\/p>\n
RBS denies the allegations and in response commissioned Clifford Chance, the law firm, to investigate Tomlinson\u2019s report, which rejected Mr Tomlinson\u2019s \u201ccentral allegation\u201d but conceded that GRG\u2019s fee structure \u201clacked clarity.\u201d<\/p>\n
The RBS boss has defended the turnaround team as a \u201cpretty good unit\u201d that was \u201cunder a huge amount of pressure.\u201d\u00a0 However, earlier this year shareholders accused the bank of \u201ccovering up\u201d for GRG\u2019s \u201ccorporate psychopaths.\u201d<\/p>\n
It is likely that the inquiries will also seek to uncover the government\u2019s knowledge of GRG\u2019s activities.\u00a0 It has emerged that the APA, a government agency responsible for insuring RBS\u2019s loans, successfully put pressure on RBS to be tougher on smaller businesses.<\/p>\n
Businesses taking part in the claim are expected to contribute to help fund any legal action, but there may be a \u2018no win, no fee\u2019 option for companies that lack the sufficient resources, an official GRG Business Action Group spokesperson said.<\/p>\n
Mr Tomlinson has acknowledged that it would be difficult for any official compensation scheme to be implemented.<\/p>\n
\u201cI don\u2019t know how you can unwind this.\u00a0 Many people have ended up in administration, at food banks almost, with lives and multi-generational businesses destroyed.\u201d<\/p>\n
Earlier this year the RBS announced plans to close down the GRG due to improving economic conditions.<\/p>\n","protected":false},"excerpt":{"rendered":"
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