Updated Guidance: What consequential losses can you claim under the RBS GRG Redress Scheme?
The Royal Bank of Scotland (“RBS”) has recently issued updated guidance in relation to consequential loss claims under the RBS Global Restructuring Group (“GRG”) Redress Scheme, to include further details on claiming simple interest and losses arising from a consequential loss (or “Secondary Consequential Losses”).
What are direct losses and consequential losses?
Direct losses are losses which arose naturally and directly from the Bank’s breaches. Any other losses which were a knock-on effect of the Bank’s breaches are potentially recoverable as consequential losses. Usually, direct losses will include fees, costs and other charges which the Bank has charged, or fees of other third parties which were incurred at the request of the Bank.
If a direct loss complaint has been upheld by the Bank, a complainant may seek to then recover any consequential losses incurred. These are any losses which fall outside the definition of ‘Direct Losses’, and could, for example, include the following:
- Loss of profit or loss of opportunity;
- Legal and professional advisors’ fees;
- The cost of additional borrowings;
- Losses from sales of assets at an undervalue;
- Tax losses; and
- Wasted management time.
It is important to remember that consequential losses can only be claimed in respect of complaints that the Bank has upheld, and for which the outcome has been accepted.
The updated guidance relates to making additional evidenced claims for Secondary Consequential Losses. An example of this could be an additional borrowing cost incurred as a result of not being able to pursue a business opportunity due to the Bank’s misconduct.
For further information about the complaints process and principles please see:
What entitlement is there to claim simple interest on consequential losses?
When RBS calculates a customer’s direct losses, an 8% simple interest figure is also usually awarded, which is intended to compensate the customer for having been deprived the use of those monies. In certain circumstances, this will provide sufficient compensation for the consequential losses incurred. In many others, there will be additional consequential losses that can also be claimed, despite the interest award.
RBS has confirmed that simple interest at 8% will not be applied to consequential losses as “a replacement of the proxy ‘opportunity cost’ by the actual amount of loss as evidenced by you. You cannot claim for Consequential Loss and also claim that you should receive a further 8% simple interest on top of that loss for an unspecified further loss or opportunity”.
Nevertheless, simple interest at 8% may still be claimed on out of pocket expenses forming part of a consequential loss claim.
RBS has also confirmed circumstances where interest on consequential losses may be recoverable. Customers may be able to recover additional interest if they are able to prove that they have incurred interest costs which would not otherwise have been incurred but for their initial consequential loss.
Where discretionary payments are concerned, interest will not be awarded as these payments are not in respect of a specific monetary loss.
What are your options in making a complaint against the Bank under the RBS GRG Redress Scheme?
These types of claims are based on legal principles and are often complex. We therefore recommend that legal advice is sought. To assist customers who have had complaints upheld, the Bank will usually be agreeable to paying the reasonable costs of an initial assessment of a consequential loss claim under the RBS GRG Redress Scheme.
Where a direct loss complaint has not been submitted under the GRG Redress Scheme prior to the Bank’s deadline of 22 October 2018, there may still be options available to recover losses, such as a court claim or a complaint to the Bank and/or via the Financial Ombudsman Service.
For more information about the RBS GRG Redress Scheme or in relation to the recovery of your consequential losses, please see our other detailed blogs;
- The RBS Global Restructuring Group Redress Scheme
- RBS’ GRG Review Process – Recovering Your Consequential Losses
For details of the Financial Ombudsman Service please click here.
How can we help?
The Banking and Finance Litigation team at Ellis Jones Solicitors has extensive experience of dealing with consequential loss
claims, whether made via court proceedings, review schemes such as the RBS GRG Redress Scheme, or through the Financial Ombudsman Service. Where appropriate, we will often undertake claims on a ‘no-win, no-fee’ basis.
If you would like to find out what your options are in respect of the RBS GRG Redress Scheme, or how we can assist you in making a complaint against a Bank or other financial institution, then please contact Paul Kanolik from our specialist Banking and Finance Litigation Department on 01202 057737 or by email.
If you would like to find out more about the RBS GRG scandal and process, further information can be found at the below links: