The Royal Bank of Scotland (RBS) has denied that its £400m compensation fund for those small businesses who suffered at the hands of its the Global Restructuring Group (GRG) is insufficient – and it has no plans to increase it.
Fees Not “Necessarily Wrongly Charged”
Despite a compensation action group accruing claims in the region of £2bn so far, RBS believes its compensation fund is sufficient – because it says the fund is not intended to compensate businesses who claim they were forced into failure.
Andrew Tyrie, chair of the Treasury committee, mentioned the action group’s plans to sue for £2bn in a letter to the bank. In his reply, RBS Chief Executive Ross McEwan said that it was “highly unlikely that businesses suffered material financial distress as a result of its actions,” and explained that compensation fund only covers fees.
“Complex fees are being refunded because we believe there is a likelihood that they were not properly communicated or explained clearly enough, not because the fees themselves were necessarily wrongly charged,” he said.
Tyrie has also questioned the FCA about when a final report into GRG will be published. FCA’s Chief Executive, Andrew Bailey, stated in his reply that the FCA would “publish a full account of its findings when practicable,” once its investigation into issues surrounding the “skilled person” review conducted by the Promontory Financial Group is completed.
Reasonable Compensation
“More detail on the design of this scheme is welcome. It will help to give firms who fell victim to GRG’s bad practices more confidence that they are to receive reasonable compensation. They deserve it,” says Tyrie.
“Nonetheless, the public remains no better informed of when, and to what degree, further details of the Independent Skilled Persons report will be published. In July 2016, Andrew Bailey advised the Committee that a report would be published ‘this year’. In his latest letter to me, he suggests that it is to be the subject of Maxwellisation. This will do nothing for the concerns of small businesses who have been waiting so long for closure.
“When it does come, the FCA’s report needs to provide a full and comprehensive corroboration of both the conclusions reached by the Independent Skilled Person, and of the level of restitution determined.”