ROYAL Bank of Scotland has pledged to update the guidelines on who is eligible to make a claim to its Global Restructuring Group compensation scheme after being accused of disqualifying people whose businesses are no longer in existence.
Currently the frequently asked questions section of the website relating to the scheme states that people can complain if their company is insolvent but adds: “We are only able to deal with the officials of the company presently appointed and listed at Companies House.”
As anyone whose company has been dissolved will no longer be listed at Companies House this has been taken to mean that they would not be eligible to lodge a complaint.
However, a spokesperson for the bank said that “any current or former shareholder can make a complaint”.
“Indeed, many of the complaints we have received have come from former shareholders and from shareholders of companies in administration,” the spokesperson added.
The spokesperson said the bank would look to “add clarity” to the information it displays about the scheme “in case anyone has misinterpreted it”.
The complaints service was set up by the bank last year after it was accused of putting financially stressed businesses into its GRG unit - which was marketed as a turnaround function - only to strip their assets for its own profit. Many businesses subsequently went into administration.
While the bank refutes the asset-stripping claims, its chief executive Ross McEwan said when the scheme was announced that it has “acknowledged for some time that mistakes were made” when dealing with customers of GRG.
The bank set aside £400 million to refund some fees charged by the unit, such as monthly management fees or asset sale fees, if it feels these were unfairly charged. These are being refunded automatically to affected businesses.
The pot will also be used to pay compensation to business owners that can prove they suffered losses as a direct result of GRG’s mistakes, with an appeals process overseen by retired High Court judge Sir William Blackburne also in place.
While the bank has clarified that even those whose businesses no longer exist will be able to take their complaint right to the appeal stage, any payout to an insolvent business would have to be made via an insolvency practitioner.
This is because the cash would have to go into any fund being used to repay creditors, with anything left at the end going to the former business owner.
If a company has already been wound up it would have to be reconstituted in order for any compensation to be paid, which, again, would likely result in payments being made to former creditors before the former business owner received a share.
Since setting up the complaints scheme last November RBS has carried out a review of all GRG’s former clients, who numbered 16,000 at its peak, identifying 3,452 that are eligible for an automatic refund of fees. That will cost the bank £100m.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here