Are you entitled to RBS compensation? Here’s how to get your money back
“Businesses can be eligible for further compensation but must take action and apply for this.”
UPDATE: 22 August 2018 – Today, Banking Competition Remedies Ltd (BCR) issued an update on the RBS compensation situation, with details on how to apply for the funds. BCR is the independent body established by the government to manage a £775m award process to boost competition in the UK’s small business banking sector. The award process known as the Royal Bank of Scotland (RBS) State Aid Alternative Remedies Package, was put in place after the EU called for it as a condition for Royal Bank of Scotland’s bailout during the financial crisis. Read our follow-up story for more.
Businesses which used RBS for business banking between 2008 and 2013 are being urged to check if they could be entitled to compensation before an October deadline comes.
Businesses that could be eligible will have been placed into the RBS ‘Global Restructuring Group’ (GRG) before 2013. However, some businesses won’t have been told they were placed into the GRG unit.
GRG was originally created to provide assistance to struggling SMEs. The unit has paid out £10m so far, but according to RBS chairman Howard Davies, the number of complaints are declining, so it was the “appropriate” time to give customers notice of its closure.
From the 16,000 firms eligible, RBS said it only received 1,230 complaints as well as a further 165 from customers outside of the scheme’s scope. From its peak in December 2016, where the bank was receiving up to 35 complaints per week, it is now receiving only six, prompting the move to close the compensation scheme out.
In addition to the £10m compensation for direct losses, RBS claims it has offered £115m in automatic refunds for fees charged by GRG.
The GRG scandal involving the bank unravelled in 2013 when an investigation was launched by the Financial Conduct Authority into the RBS business support unit created in 2008 (following the release of a report by Dr Lawrence Tomlinson).
The investigation found that some businesses in RBS’ GRG unit were subjected to inappropriate treatment with the bank prioritising price increases and debt reduction over the long-term viability of customers.
Following the revelations, a compensation scheme was set up in late 2016 for those businesses affected by being in the GRG unit.
“A number of businesses may not even be aware that they were in the GRG unit so business customers who were with RBS between 2008 and 2013 should check. There is an automatic refund scheme in place which means RBS will proactively contact some customers who are eligible for refunds,” Anna Barnes, Partner and Head of the Dispute Resolution team at law firm SAS Daniels LLP, said.
“However, this only covers the refund of certain prescribed fees. Businesses can be eligible for further compensation but must take action and apply for this.”
“We believe that many businesses could have a case for compensation but are not aware. Now that a deadline has been set, time is of the essence. Businesses also need to bear in mind the Limitation Act 1980 which contains prescribed time limits for bringing court proceedings.”
Any business, which was a customer of RBS between 2008 and 2013, could have been within the GRG unit.
BCR’s RBS State Aid Alternative Remedies Package a positive indication that the process is moving forward after a series of delays.
Further reading: £775m RBS bank fund—what do UK SMEs need to know?
But what is the RBS State Aid Package? Niels Turfboer, managing director of online lender Spotcap, explains that in the short term, the success of the this measure will depend on how much competition it encourages in the SME banking market. “We’re talking about more providers with enhanced SME-specific offerings. Ultimately, that should lead to better customer outcomes,” he said.
“Looking ahead I wouldn’t be surprised if we see a groundswell of innovation and I believe that, for SMEs themselves, the next few years could be some of the best ever in terms of support from the industry.”
If your business is affected by this, get in touch to share your story.
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