On Friday 20th July 2018, RBS announced their intention to close their redress scheme, led by Sir William Blackburn, for victims of their controversial Global Restructuring Group, with claims no longer being accepted after 22nd October.
The APPG on Fair Business Banking takes issue with this news from RBS on a number of crucial grounds, seeing it as troubling news for small business owners seeking access to justice for mistreatment at the hands of RBS GRG for historic banking abuses. The APPG is concerned that the amount of compensation offered as part of the scheme is not adequate in providing sufficient redress, and that this indicates the scope and criteria of the scheme are too limiting.
Whilst we acknowledge that RBS has extended its scope to include independent oversight of consequential losses, it should not be beyond the scope of a major financial institution to be able to provide a comprehensive redress mechanism which considered both direct and indirect losses caused to small businesses, and we are certain there is much more scope for appropriate redress.
In particular, whilst RBS state the declining rate of compensation claims as sufficient evidence to justify the closure of the scheme, with 1,230 complaints made out of the 16,000 customers affected, the APPG believes that this is not sufficient grounds for closure of the scheme. We believe that the small number of claims is as a result of the unwillingness of insolvency practitioners, who have been tasked with making claims on behalf of business owners, to bring claims against RBS GRG for the business owners they represent. We have serious concerns that IPs are conflicted and are not pursuing claims where they should be, to the detriment of business owners and entrepreneurs across the UK. The APPG will be focusing on the role of insolvency practitioners in facilitating misconduct in the financial services sector in the coming months.
The closure of the scheme would therefore leave many potential claims from business owners unresolved and without the justice they require to restore faith in business lending.
The announcement from RBS that they intend on closing the controversial compensation scheme also serves as a reminder for the need for an independent, fair and effective primary dispute mechanism, such as the establishment of a financial services tribunal advocated by the APPG. The announcement demonstrates the lack of confidence and trust in internal redress mechanisms as it shows these mechanisms rely on the goodwill of financial services institutions which can be withdrawn at a whim leaving small businesses without the access to justice that they need to restore faith in the small business lending market.