Small businesses to launch £1bn legal action against RBS in early 2017
Legal action on behalf of over 100 small businesses claiming RBS drove them into the ground for its own gain is set to launch early next year.
RGL Management Limited was formed in March to coordinate action against the bank's now defunct turnaround division, Global Restructuring Group (GRG). It is now fully funded to issue a claim and has told Morning Wire it is ready to launch legal action in early 2017.
There are now roughly 140 parties signed up and, with claims the averaging between £6m to £7m, the total claim could potentially pass the £1bn mark.
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The announcement comes roughly three years after former government adviser Lawrence Tomlinson published a report alleging the RBS division drove small businesses into financial difficulties so they could be pushed into the GRG. This would in turn benefit the bank through further fees, increased margins and allowing it to purchase properties at knockdown prices through property division, West Register.
The announcement also may well place pressure on the Financial Conduct Authority (FCA), which is overdue to publish a report examining the allegations Tomlinson made about the GRG unit.
The watchdog's report was initially due out before the end of 2015, but the publication date has since been pushed back.
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"It is increasingly clear that any business waiting on the FCA and RBS to produce a compensation scheme is at best going to be disappointed and at worst is being deliberately led up the garden path," said James Hayward, chief executive of RGL Management.
"It is our view that this is an intentional ploy to time out businesses which have legitimate claims.
"Once our claims are issued businesses will have missed the only opportunity open to them to seek redress from the courts.
"Our funding is in place, our investigations are uncovering compelling evidence of illegality and we will be issuing our claims in early 2017. Cases need to be worked up and businesses need to take action now and join our action – waiting on this report is playing into RBS's hands."
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Solicitors firm Humphries Kerstetter along with barristers from 3 Hare Court Chambers have been secured to represent the claim.
RBS and the FCA declined to comment. However, the regulator announced back in April that it was in the process of reviewing a draft final report it had received from a skilled person and that there were a "number of important steps to be taken before the report is finalised".