RBS will face legal action worth billions for ‘dash for cash’ scandal
Proactive Investors, 11.10.16
RGL Management, a legal team specifically formed to pursue claims against RBS, has confirmed it will launch legal action.
Global Restructuring Group (GRG) is accused of driving small businesses into financial ruin for its own gain during and after the financial meltdown of 2008
It could be pay-back time for Royal Bank of Scotland Group plc (LON:RBS) as hundreds of small business owners look to pursue claims against the state-owned lender over the so called ‘dash for cash’ scandal.
RGL Management, a legal team specifically formed in March for the purpose, has now confirmed it will launch legal action against the bank early next year, which could run into billions of pounds.
The action is against the bank’s controversial turnaround division, Global Restructuring Group (GRG), after a report alleged it had driven small businesses into financial ruin for its own gain during and after the financial meltdown of 2008.
As reported yesterday, latest revelations handed to the BBC and Buzzfeed showed the so -called turnaround division swooped to buy the assets of firms in distress or hit them with unmanageable interest rates on loans.
Staff could even enhance their own bonuses by identifying firms that could be squeezed.
The Financial Conduct Authority is due to publish a report surrounding the allegations after it was ordered to by then Business Secretary Vince Cable but no date has yet been set and the original publish date had been the third quarter of 2014.
Around 16,000 businesses were reportedly put into GRG after the 2008 financial meltdown, with the number of loans issued by the unit increasing 500% to £65bn between 2007 and 2012, allowing allowed GRG to rack up £1.2bn in profits in 2011.
In a statement reported yesterday, the bank said: “RBS 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.”
Shares in RBS are today are up 1.79% to 181.80p.
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