RBS sued over banking tactics
The Royal Bank of Scotland (RBS) is facing fresh legal action from entrepreneurs who claim senior staff drove their businesses “into the wall” so that valuable assets, such as property, could be seized.
Lawyers acting for the individuals confirmed on Friday that court papers are to be lodged within a few months and that damages of up to £100m are being sought.
Patrick Selley, of London-based Keystone Law, is representing former RBS customers who are part of the proposed group action. He said legal opinion obtained from senior counsel was that RBS structured financial contracts alongside business loans, which often extended beyond the life of the loan.
These contracts, claims Selley, could not be broken without incurring massive fees and were designed to lock-in clients to hefty interest payments, often lasting decades. Assets such as property were routinely used as security.
“We are confident we can plead systematic fraud by RBS,” said Selley. “In our opinion, the bank deliberately went after people with valuable property assets. I can say that the total of claims represented by the group of clients currently being advised by counsel is likely to be between £50m and £100m.”
The legal action threatens to be another blow to the bank’s battered reputation. Last month, RBS, which is majority-owned by the taxpayer, was forced to launch a review of more than 1,800 loans through the government’s Enterprise Finance Guarantee scheme amid concern they were mis-sold. In November, RBS was among six international banks handed record fines totalling £2.7bn for rigging the foreign exchange markets.
Last year, senior RBS executives were also criticised after they told the UK parliament’s treasury committee that Global Restructuring Group (GRG) — a unit set up to deal with struggling businesses to which RBS had lent money — was not a profit centre, even though, as the bank has subsequently accepted, it was. It followed a report by Lawrence Tomlinson, written while he served as entrepreneur in residence at Vince Cable’s Department for Business, Innovation and Skills, claiming the unit exploited and, in some cases, forced viable businesses into insolvency for profit.
Among those who claim their business was destroyed by RBS is Nigel Henderson, who ran hotels in Montrose and Skye. Henderson, whose case is being taken on by Selley, claims he was asked to pay £240,000 in charges to settle a business loan with RBS in the late 1990s. He refused and his case was passed to GRG. The opinion of a QC who has reviewed Henderson’s case is that RBS structured loans in such a way that “early repayments could never be made” and ensured customers had to pay the full interest owed.
Henderson’s fight for “justice and restitution” has attracted the support of Nigel Don, the SNP MSP for Angus North and Mearns, who is scheduled to meet Frank Mulholland, the Scottish Lord Advocate, next month.
“It is very evident that this institution is without any shadow of doubt a rogue organisation that has taken the worst elements of mafia conduct and applied these for the sole use of terrorising unwitting and innocent customers to force them into financial collapse and thereafter benefit from those customer’s assets,” said Henderson.
A spokeswoman for RBS said it could not comment on imminent legal action but pointed out that Henderson’s case had been subject to two separate reviews and two court cases, all of which ruled in the bank’s favour. “Against this background, the bank’s position remains that it does not accept the allegations and considers the case to be closed,” she said.
Patrick Selley. Keystone Law, 48 Chancery Lane, London, WC2A 1JF.
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