Banking and Financial Mis-selling
Our banking and finance team have extensive experience and expertise in a wide range of banking and finance related issues helping clients to recover losses incurred as a consequence of being mis-sold financial products and irregular banking activity.
There has been a substantial rise in complaints and litigation against financial institutions particularly in relation to the mis-selling of financial products and banking misconduct. Recent changes to the Banking Codes of Practice and increased regulation have created circumstances in which the number of complaints against financial institutions has increased markedly.
In appropriate cases, we provide ‘No Win No Fee’ Agreements and where appropriate ‘After the Event’ Legal Insurance; so if you think you may have been mis-sold a financial product or would like advice in relation to your banking dispute, please contact a member of our Banking and Finance team using our form on this page.
RBS Global Restructuring Group
Previously known as ‘Specialised Lending Services’ the Global Restructuring Group (GRG), was set up by Nat West and RBS in the 1990s. It was described as a business support unit intended to assist businesses deemed by the bank to be in financial difficulty.
However, a review conducted by the Financial Conduct Authority found that in some instances GRG not only failed to assist those whose affairs it administered but actually acted to their detriment. A number of areas were identified where “inappropriate treatment” of small businesses could be viewed as commonplace and “systemic.” This took the form of a failure to treat customers fairly, act in good faith, take into account the long term viability of the business, honour contractual promises, together with a failure to record or properly explain GRG fee charges.
After the credit crunch, GRG assumed control of business customers with £65 billion worth of assets under the guise of Project Dash for Cash. As a result of allegations of misfeasance, GRG was abandoned in August 2014.
As a consequence of those allegations a report by Dr Lawrence Tomlinson was published in November 2013, entitled Banks’ Lending Practices: Treatment of Businesses in Distress. His report alleges that in effect RBS used its GRG department to generate revenue from customers in financial distress by charging them increased fees, increasing interest margins and undervaluing assets. The report identified inappropriate practices such as:
Business customers being driven into the clutches of GRG by pointing to minor breaches of loan covenants; ‘The undervaluing of customers’ property resulting in a breach of loan-to-value covenants’ and the ‘systematic and institutional’ practice of artificially distressing viable businesses, setting customers ‘on a journey towards administration, receivership and liquidation’.
Between 2007 and 2012, some 12,000 SMEs were transferred into RBS’s so-called ‘turnaround’ group, with a huge increase in the number and value of loans to customers in GRG totalling more than £65 billion.
In November 2016 RBS set up a new complaints process for customers whose banking relationship was handled by GRG during the period 2008 – 2013. RBS will review a complaint and if the complaint is upheld the complainant will then have the opportunity to submit a further claim for consequential losses.
How we can help with your compensation claim
Our Banking and Finance team can help you to recover the compensation you are entitled to, whether through the RBS compensation scheme or court proceedings.
To advise you fully we will investigate the merits of the claim, draft the complaint and provide support throughout the complaints process. If additional information is required we will advise you how to secure it or we will obtain it on your behalf. We will investigate whether the bank’s actions were fair, reasonable and appropriate when you were in GRG, including the reasons given for transferring you to GRG in the first place. We will review the bank recovery and resolution plan (where applicable) and if there was a forced sale of assets whether the bank acted appropriately in this regard.
If you decide not to accept the bank’s offer we will assist with any referral to the Financial Ombudsman Service (“FOS”) providing advice and support through the FOS process.
Alternatively, if you decide to pursue the matter through the courts, our lawyers have the requisite knowledge and expertise to advise you how best to proceed. We will take into account your financial circumstances in order to provide an affordable service, whether that be on a ‘No Win, No Fee’ basis, or with the aid of suitable ‘After the Event’ legal insurance.
Get in touch using our enquiry form and one of the Banking and Finance team members will get back to you to discuss your claim in more detail.
Financial Product Mis-selling
In the past few years there have been a number of high profile mis-selling scandals, most significantly:
Fixed Rate or Tailored Business Loans
Fixed Rate or Tailored Business Loans are a financial product introduced in order to fix the interest payable at a given rate, thereby affording the individual or business customer a degree of certainty when it comes to making repayments.
In order facilitate this service the bank seeks to offset the cost of offering a fixed rate by ‘hedging’ its own position. This is achieved by entering into a trading position with a third party, which has the effect of mitigating or cancelling out any potential loss for the bank.
Unfortunately, problems can, and do, occur when the lender misrepresents the Tailored Business Loan as being a product created by a simple agreement, which it patently is not. Banks sometimes fail to draw the customer’s attention to the potentially punitive breakage costs imposed in the event of termination.
Consequently, customers can find themselves effectively locked into agreements due to the crippling financial burden that any attempt at refinancing would cause as a result of the imposition of the breakage costs.
It is often unclear whether you have a Fixed Rate or Tailored Business Loan, but if your breakage or exit costs exceed 1% of the loan amount, it is possible that you may have been the victim of mis-selling.
If you believe that you were mis-sold a Fixed Rate or Tailored Business Loan, do not hesitate to contact a member of our Banking and Finance Team here.
Our lawyers will review your Loan Agreement and advise how best to proceed. We offer expert advice at an affordable cost taking into account you personal circumstances, and will consider how to proceed in a cost effect way, whether that is on a ‘No Win No Fee’ basis, or with the assistance of suitable ‘After the Event’ Legal Insurance.
Interest Rate Hedging Products
Interest Rate Hedging Products such as Swaps, Collars or Caps are complex financial products often sold by banks to small or medium-sized businesses.
Often, these products were imposed upon businesses as a condition of lending and described as ‘protection’ or ‘insurance’ against rising interest rates.
In many instances, businesses entered into Interest Rate Hedging Product arrangements not realising the risks inherent in the product with the potentially ruinous consequences, such as being required to make substantial, unexpected interest payments and/or having to pay excessive breakage or cancellation fees to exit the arrangement.
In some instances, customers have subsequently discovered that the arrangement they entered into constitutes a separate product to the underlying loan, with the consequence that the customer is compelled to continue making payments under the terms of the arrangement, even after the loan has been repaid.
CM Solicitors can help you recover interest payments made under the terms of the arrangement, together with cancellation fees for terminating the product, and other losses incurred, such as additional bank fees and charges. Click here to find out more about the team.
Following a detailed review of your case, together we will consider and decide how best to proceed, whether that be to recover damages on your behalf through the Financial Conduct Authority, the IRHP Review Scheme, the Financial Ombudsman Service or court proceedings.