William Fox Bregman
Partner, Solicitor & Head of Banking and Finance Litigation
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Date Published:23 Nov 2016 Last Updated:12 Apr 2021

Concerns over RBS GRG Compensation Scheme

Banking & Finance Litigation

FCA Statement and Terms of the Compensation Scheme:

On 8 November 2016 the FCA released a preliminary statement regarding its Investigation and the Expert Report it had received. The statement included findings that some elements of the Bank’s malpractices were systematic because of the conflict of interest between West Register and RBS. The Bank, at times, had failed to communicate its terms and charges clearly and effectively, to make “robust” / accurate valuations, or to handle complaints fairly.

In light of advice and the statement from the FCA, RBS announced it had set aside £400m for its 12,000 GRG Customers. RBS had set aside the funds in order to automatically refund GRG customers who had incurred “complex charges” and to make awards through an internal complaints process to be overseen by retired Judge Sir William Blackburne. The complaints process is under early scrutiny.

The “Independent Expert” and Lack of Review:

The Times newspaper has cast doubt upon the neutrality of Sir William Blackburne as supervisor of the scheme because of his judgment for RBS in a debt recovery dispute in 2010. A year later, the Court of Appeal found that Sir William had been deceived by the Bank and it had failed to correct the information it provided to the court in the case. An RBS spokesman has since acknowledged that “the issue should have been disclosed when the Redress Scheme was announced.”

The expert’s role is further limited because they have no supervision of consequential loss complaints and so the Bank will make unsupervised decisions as to the merits of these complaints. The Bank has not made available an appeals process to another expert or the regulator for complaints dismissed under the scheme.

Inadequacy of the Compensation Fund:

Given the fact that GRG generated £1.2bn of profit in 2012 alone, the £400m fund set aside for compensation seems inadequate. Half of the £400m fund is expected to provide for the automatic refund and another £100m is likely to be required to fund the complaints handling process, leaving only £100m for redress to complainants. RBS has under provided for compensation funds in the past, providing only £50m for the IRHP Review Scheme in 2012 when its true liabilities were £1.5bn by 2016 and here we may be witnessing a similar problem again.

Limited Scope of Scheme:

Another problem for many GRG customers is that they will be excluded from the complaints scheme if they have raised an internal complaint in the past, have pursued a complaint through the FOS or have threatened to litigate against the Bank. Clearly these limitations exclude a high proportion of customers from the review that they are seeking.

How Ellis Jones Can Help You:

Ellis Jones has a highly specialised and well established Banking and Litigation Department which has raised in excess of £40m in redress for its clients since 2012. We have extensive experience in representing clients making a claim against GRG. Given the apparent flaws in the RBS Compensation Scheme, we can advise customers as to whether this is the best avenue of redress or whether the issuing of a claim and / or preparation of a complaint to the FOS or FCA might be a more appropriate alternative.

There are strict limitation deadlines on making claims through the Courts. If you have been transferred to GRG, contact William Fox Bregman, Partner of the Banking and Finance Litigation Department, on 01202 525333 or William.FoxBregman@ellisjones.co.uk for advice.