RBS could face ‘thousands’ of global restructuring claims

Law Gazette, 11.10.16

 

A lawsuit on behalf of companies affected by Royal Bank of Scotland’s alleged mishandling of the affairs of struggling businesses could see ‘thousands’ of claimants come forward, a lawyer bringing the case has said.

 

Mark Humphries, senior partner at boutique litigation firm Humphries Kerstetter, told the Gazette that several hundred companies were affected and that he would ‘not be surprised if this stretched to thousands’.

 

Humphries Kerstetter, based in the City of London, is working on behalf of RGL Management Limited, a company set up earlier this year to pursue RBS for actions related to its now disbanded Global Restructuring Group (GRG).

 

Leaked documents obtained by BuzzFeed News and the BBC, yesterday, support allegations from a report in 2013 that said the bank had deliberately put viable businesses on a path to destruction while aiming to pick up their assets cheaply. The report was compiled by Lawrence Tomlinson, who was entrepreneur in residence at the department for Business, Innovation & Skills.

 

The leaked documents also showed that Derek Sach, the global head of GRG, was running a division which claimed to help business customers turn themselves around while also sitting on a committee at RBS’s property arm West Register. West Register decided what customer assets to buy for the bank.

 

Humphries added: ‘Now that the documents have been made public we can talk more freely about the kind of evidence that could be used in litigation when it begins—likely to be early next year.’

 

He said that the cases would be moved forward in tandem to enable common issues ‘to be determined in an efficient way, as opposed to having a string of claims’—though he stopped short of describing it as a class action suit.

 

Meanwhile, magic circle firm Clifford Chance has said it is confident of the quality of its investigation into Tomlinson’s allegations.

 

The firm was commissioned by RBS to produce an independent report on the allegations. The 2014 report concluded that there was no evidence to support most of Tomlinson’s allegations, for example that West Register was deliberately targeting client’s assets.

 

However, the documents show West Register was being passed information about properties held by customers transferred to GRG even before the companies had agreed to sell them, apparently undermining that conclusion.

 

A spokesperson for the firm said it reviewed more than 400,000 pages from RBS’ files and interviewed 138 customers.

 

‘We found no evidence to support the allegation that we were investigating, but anyone who reads the publicly available report can see that we identified a number of other issues in the course of our work, which were widely reported by the news media at the time. We are confident in the conclusions of the report both in respect of the main allegation that we were investigating and the other issues that we identified.’

 

RBS told the BBC it has been very clear that GRG’s role was to protect the bank’s position.

 

’In the aftermath of the financial crisis we did not always meet our own high standards and we let some of our SME customers down. Since that time, RBS has become a different bank and significant structural and cultural changes have been put in place, including how we deal with customers in financial distress,’ it added.

 

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