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Lloyds Banking Group is facing an extra bill of up to £1.8bn to cover a late rush of claims for the mis-selling of Payment Protection Insurance (PPI)
Lloyds said it saw "a significant spike" in claims in the run-up to the final deadline of 29 August and that as a result would take an extra charge of £1.2bn-£1.8bn and said it would be suspending its share buyback plan - because of the uncertainty over PPI payments.
Banks and other providers sold millions of the policies, mainly between 1990 and 2010.
Last month's final deadline for PPI compensation prompted a surge of last-minute claims from consumers.
Lloyds said that at the time of its half-year results in July, it had assumed that PPI claims would continue to come in at the rate of 190,000 a week but in the run-up to the final deadline, Lloyds said it received 600,000 to 800,000 a week.
"Including claims by the Official Receiver, the group now estimates that it will need to make an incremental charge for PPI claims, in addition to the provisions to 30 June 2019, in the range of £1.2bn to £1.8bn in its Q3 interim management statement," the bank said.
Lloyds is not the only UK bank to have been hit by the late wave of claims as last week, RBS said it expected to take an additional charge of between £600m and £900m, while shares in CYBG fell sharply after it warned it would take a hit of up to £450m.
In February this year, Lloyds said it planned to buy back £1.75bn of its shares this year. However, given the "uncertainty around the final outcome for PPI" Lloyds said it had "decided to suspend the remainder of the 2019 buyback programme, with c. £600m of the up to £1.75bn programme expected to be unused at mid-September". - BBC Business News - 9th September 2019
Comment: The FCA imposed a deadline for PPI claims of 29th August 2019. Will the total PPI compensation payouts be the final 'nail in the coffin' of the banking industry as we know it? It's a sobering thought, that even the immense amount predicted of £53bn will never compensate for all that was taken or inflicted on the bank customers from this colossal and devious banking 'scam'. All banking groups rushed to enjoy PPI profits and many followed Lloyds because it was so easy to inflict PPI on customers. But, many small businesses failed because of the banks 'up front' and obscene PPI payments charged to loans and sales which then also increased the bank interest being charged. The banks were completely out of control and the regulators just watched as many small businesses were 'fleeced'.
Whilst we may all hope it will not happen again - can we be sure of that? Regulators have always protected banks first - adopting the 'three wise monkey's theory' - not seeing - not hearing and not speaking, even when it was all there in front of their eyes. In my experience, UK banking consumer's interests have always been last in our bank regulator's thoughts and priorities. - Eddy Weatherill - IBAS - 9th September 2019
See also: https://www.theguardian.com/business/nils-pratley-on-finance/2019/sep/09/banks-have-only-themselves-to-blame-for-ppi-reckoning
Industry bill for PPI claims could hit £53bn - The payment protection insurance (PPI) scandal could cost banks £53bn, according to a forecast made as firms warned of mounting bills from claims.
Dominic Lindley of New City Agenda made the estimate as CYBG warned of a potential £450m bill for new claims. Shares fell 21% to record lows.
The owner of Clydesdale, Yorkshire and Virgin Money blamed an "unprecedented volume" of complaints sparked by the 29 August deadline for claims. Other banks also face higher costs.
Royal Bank of Scotland, owner of NatWest, said on Wednesday it could face a £900m charge, while Co-operative Bank said on Thursday it was assessing its costs.
Mr Lindley, who has been keeping a tally at the think tank, said: "This means that total provisions from the banks could reach £53bn." He believes the bank with the biggest bill, Lloyds Banking Group, could announce an extra provision of £2bn, while Barclays might set aside as much as £1bn more.
PPI was designed to protect borrowers if they had an accident, fell sick or lost their job. But in millions of cases, the policyholders did not understand what they were paying for or that they might not be covered.
The deadline sparked a wave of publicity and fresh claims, according to the industry.
CYBG, which bought Virgin Money last year, said it received more than eight months' worth of requests for information about potential claims in just one month, with approximately 340,000 in aggregate over five weeks and some 120,000 of these were received in the final three days.
It said it also received a sustained increase in complaints during the same period, with an average of 5,000 a week during the first four weeks of August and an additional 22,000 complaints submitted during the final three days.
Co-op Bank on Thursday said it had "received a substantially greater volume of inquiries and complaints than expected in the final days prior to the complaint deadline" and was assessing the impact on its costs for processing and paying out claims.
Mr Lindley said the last-minute spike in PPI complaints would have "a significant impact on the banks when they announce their next financial results".
Ian Gordon, analyst at Investec, said the announcement by CYBG was "really quite shocking in terms of the anticipated damage".
He pointed out that £400m is 20% of CYBG's current stock market. He now assumes that the bank will not pay a dividend for this year.
CYBG's shares fell 20% to 110p - the lowest level since since it was spun out of National Australia Bank in 2016. – BBC Business News 5th September 2019
The FCA must stop making excuses and act to avoid another GRG scandal - Baroness Bowles is a Liberal Democrat peer in the House of Lords and her views were published by City AM on 27th June 2019:
“It is six years since the damning accusations came to light that the Royal Bank of Scotland (RBS) had been decimating small businesses for its own benefit.
It was in fact a businessman, an adviser at the time to Vince Cable as business secretary in the coalition government, who uncovered and pulled together the dossier accusing the bank.
Following a five-year investigation, the Financial Conduct Authority (FCA) has now produced its report on the scandal. It is disappointing: its conclusion finds no one guilty, and its only answer to what happened there is a gap in our regulations. Not exactly ground-breaking. So, today my Liberal Democrat colleagues and I have secured a debate in the House of Lords to urge the Conservative government to join us in demanding action.
The scandal started with Global Restructuring Group (GRG), a unit which sat within RBS. GRG was in theory set up to help turn around the fortunes of struggling businesses which had taken out loans with RBS.
But the reality was far more sinister; RBS bullied business customers to move to GRG by demanding instant repayments. Customers were then stripped of their assets in order to benefit GRG’s own bottom line.”
“GRG dealt with large companies as well as small ones, but, as has been widely reported in the media, it was for the most part the SMEs which were “mistreated” at the hands of RBS – 92 per cent, in fact.
“Mistreated” is an understatement. Lives were ruined as RBS customers lost their livelihoods, their homes, and in some incredibly tragic cases, their lives. A leaked training document for RBS staff stated: “sometimes you need to let customers hang themselves”.
The FCA’s report, although damning about RBS’ conduct, is shamefully weak on plans for enforcement. It presents a catalogue of excuses of why action cannot be taken both against RBS now, and to prevent this from happening again.
Neither of these is an impossible ambition. Under the FCA’s existing Principles for Good Regulation: “a firm must take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems”. RBS’ behaviour clearly falls short. This has been used before to pursue banks for the unregulated activity of foreign exchange, so why can it not be used for commercial lending for SMEs?
It is equally outrageous for the FCA to imply that commercial lending to SMEs is not systemically important. There are 5.6m SMEs in the UK employing over 16.2m people – they are a crucial part of our economy. And RBS was the largest lender for them.
The FCA also claims that because RBS’ activities are unregulated, with no standards set, there is nothing to measure “fit and proper” against. But, undeniably, the actions of those working at GRG fell well below what can be seen as fit or proper.”
“Finally, the FCA has said that it was previously powerless to investigate GRG because the unit was outside the regulator’s remit. Now, new powers mean that if a similar situation were to occur again, the FCA might launch a probe, but apparently it would be “inappropriate” to look at the GRG scandal using those new powers, and it is far from clear that the powers would lead to significant enforcement.
This is simply not good enough. Not only does the FCA owe it to victims to launch a thorough investigation, but it should be implementing regulations to ensure that this cannot happen again, not merely focusing on giving itself powers to investigate if it does.
GRG unfairly destroyed lives, repossessed homes, acted aggressively and without transparency or proper control. What happened at RBS cannot be repeated, and the FCA must be at the forefront of ensuring this.
The Liberal Democrats demand better and the victims of the scandal deserve it. Commercial lending for SMEs must be regulated. The FCA must stop making excuses and act. To fail to do so is to leave all those vulnerable to the same treatment that caused this scandal in the first place.” - Baroness Bowles opinion follows the FCA publishing their report on the 13 th June 2019 (as shown below):
FCA slammed over ‘whitewash’ RBS GRG report - The Financial Conduct Authority (FCA) today published its report into why it was unable to take enforcement action against senior individuals within the GRG, which has been accused of stripping its customers assets to shore up its own balance sheet at the time of the financial crisis.
Kevin Hollinrake MP, co-chair of the APPG on fair business banking, said: “This report is another complete whitewash and another demonstrable failure of the regulator to perform its role.
“The FCA must publish a full account of its findings including naming those responsible for the shameful mistreatment of thousands of UK SMEs.”
“Phase two of the FCA’s own final requirement notice was supposed to ‘consider the root causes’ and establish whether ‘the causes of such treatment were known about, authorised by and/or sanctioned by management within RBS Group’. They have manifestly failed to do this. - City A.M. 13th June 2019
Bank of Scotland fined £45m for failing to report HBOS fraud - Bank of Scotland has been fined £45.5m for failing to report suspicions of fraud at its Reading branch.
The Financial Conduct Authority (FCA) said there was “insufficient challenge, scrutiny or inquiry across the organisation and from top to bottom”.
The bank identified suspicious behaviour at its Reading-based impaired assets team in early 2007, the FCA said. The fraudsters pushed multiple small firms out of business, and stripped their assets for personal gain.
“BOS’s failures caused delays to the investigations by both the FCA and Thames Valley Police. There is no evidence anyone properly addressed their mind to this matter or its consequences.
“The result risked substantial prejudice to the interests of justice, delaying scrutiny of the fraud by regulators, the start of criminal proceedings as well as the payment of compensation to customers.” - City A.M. 21st June 2019
TSB pledges to refund fraud victims - TSB has become the first UK bank to pledge to refund customers who fall victim to any type of fraud.
The "fraud refund guarantee" will cover cases where customers are tricked into authorising payments to fraudsters, as well as unauthorised transactions. The move comes as the bank tries to rebuild its image after an IT meltdown last April left 1.9 million customers unable to access their own money.
Banks have been under pressure to help tackle the rise in sophisticated fraud.
Richard Meddings, acting chief executive of TSB, told Radio 5 live's Wake Up To Money that the move was "about giving piece of mind to our customers and doing the right thing". He said: "It's a major societal blight. Innocent customers are being tricked."
He added that the bank was investing in education for customers and staff about fraud, but also had a message for crooks: "If you come for one of my customers, we will hunt you down." – BBC Business News 15th April 2019
IBAS comment: The latest TSB ‘pledge’ follows what was a PR and IT disaster which affected a great many SME’s/business banking customers. The FCA has still to publish it’s own findings whilst TSB itself commissioned an independent review from lawyers Slaughter and May to detail what went wrong and what lessons need to be learned. We look forward to reading both.
What we know is that Spanish bank Sabadell bought TSB in 2015 and in 2018 they attempted to move customer records from the old Lloyds Banking Group computer platform to the Sabadell Proteo platform and that proved to be a disaster as customers became ‘locked out’ of their accounts and some customers being given access to the confidential records of others – see https://www.bbc.co.uk/news/business-46258889
The IT issues were many it seems and they continued for many weeks despite the bank's positive PR. TSB came under fierce criticism for the IT failings leading to a loss of circa £105m by the bank due to that ‘meltdown’ as the bank was forced to compensate customers and ‘put things right’ - see https://www.bbc.co.uk/news/business-47085474
The good news for TSB is that shortly their new chief executive Debbie Crosbie will take over a bank which has a Common Equity Tier 1 capital ratio - a key measure of financial strength – which stands at 19.5% and is among the strongest of UK banks.
So, maybe the ‘new broom’ and also the ‘will’ is there for this bank to now turn the previous 2018 disasters into opportunity and by doing so also ‘show’ us all that it can become an SME ‘champion’ – we will watch with interest. – Eddy Weatherill - IBAS - 15th April 2019
MPs call for inquiry into alleged forgery of signatures. - MPs are pressing the Treasury Select Committee to open an immediate inquiry into the alleged forgery of signatures in bank court documents.
They also want Lloyds chief executive Antonio Horta-Osorio to be questioned over how the bank treats customers who say they have found evidence of systemic fraud.
The all-party group on fair business banking says Lloyds appears to be repeating the same conduct it displayed towards customers who uncovered the HBOS Reading fraud, seeking to silence them.
Lloyds has denied there is evidence of systemic fraud and said it "does not recognise the issue" as set out by the group of MPs.
Kevin Hollinrake MP, chair of the all-party group, made the call for an inquiry after getting what he says was an unsatisfactory response from the bank.
The Civil Procedure Rules govern how law firms must behave in legal proceedings including repossessions.
Practice Direction 22 Statements of Truth
3.9 The individual who signs a statement of truth must print his full name clearly beneath his signature.
3.10 A legal representative who signs a statement of truth must sign in his own name and not that of his firm or employer
Questions over signatures are not confined to Lloyds. This article cites four signatures which were purportedly all signed by the same person at a different company on the same day and further evidence suggests one person has been signing under more than one name. – BBC Business News 29th March 2019
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at: Your Money Not a moving account - BBC 22/07/99
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Barclays fined $15m for whistleblowing breach - Barclays has been fined $15m by a US regulator after its chief executive Jes Staley attempted to unmask a whistleblower. The New York State Department of Financial Services (DFS) found Barclays had violated local banking law and its own procedures during the handling of the matter. The DFS's thorough investigation uncovered actions at the top that exposed the bank to risk and created an atmosphere in which employees might doubt that it was safe to escalate issues of concern to the bank." Mr Staley was fined £642,430 in the UK for breaching rules by attempting to find the person or persons who wrote the letters. Barclays also cut his bonus by £500,000. - BBC Business News - 18th December 2018
IBAS Comment: There is a stark difference between the US Regulator (DFS) and the FCA for the same complaint - not only in their assessment and what they then required of Barclays because of the perceived senior management flaws but also in the punishment and scale of the fines. It would appear that the DFS decided Barclays should pay a fine of more than 15 times greater than the FCA’s fine. What does that ‘say’ to UK banking consumers about the effectiveness of our banking regulator? Also, what is the 'message' that the FCA is now sending to whisteblowers in the UK? - Eddy Weatherill IBAS - 18th December 2018
Legal aid advice network 'decimated' by funding cuts - Cuts to legal aid have created "deserts" of provision across England and Wales, a BBC investigation found. Analysis shows up to a million people live in areas with no legal aid provision for housing, with a further 15 million in areas with one provider.
Richard Miller, head of justice at the Law Society, said provision of legal advice across England and Wales was disappearing, creating "legal aid deserts"."Even for those cases where legal aid is still supposed to be available, it can be very difficult for a client to find a lawyer willing to take on the case," he said.
This has prompted a more than five-fold rise in people representing themselves in court. Volunteers at the Personal Support Unit helped around 65,000 of them last year. Six years ago it was fewer than 10,000. - BBC News 10th December 2018
IBAS Comment: That means that Litigents in person have increased by 650% in last 6 years and that 'access to justice' for many will now rely totally on their knowing how to present their own case in a court. Those with Business Banking Disputes also need to know how business banking dispute cases can be 'managed' for the customer's benefit and to avoid where possible those disputes 'moving on' to a bank's court claim see UK Litigation Report and also IBAS FAQ's - Eddy Weatherill – IBAS - 10th December 2018
See IBAS Response and feedback to the FCA on SME as Users of Financial Services and also the complaint (provided with it) alleging an ex RBS senior manager 'decided' an RBS/NatWest FOS case in favour of RBS/NatWest whilst he was employed as an Ombudsman.
Whilst we note the IBAS response was well down and 'buried' (in the 200 pages) - to their credit it was published by the FCA.
IBAS will provide a copy of the IBAS response to the FCA to those who email and request it from IBAS.
FCA confirms greater access for SMEs to the Financial Ombudsman Service - The changes will mean that SMEs with an annual turnover below £6.5m and fewer than 50 employees, or an annual balance sheet below £5m will now be able to refer unresolved complaints to the ombudsman service. Under the ‘near-final’ rules published today around 210,000 additional UK SMEs will be eligible to complain to the ombudsman service. - FCA - 16th October 2018
RBS Comes bottom of Customer's Bank League - For business customers, just 47% of those with RBS would recommend the bank in terms of overall service quality. Handelsbanken came top with 84%.- BBC Business News - 15th August 2018
IBAS Comment: No wonder Royal Bank of Scotland comes last in recent bank league table
RBS pays £3.6bn to settle financial crisis misconduct probe
The Royal Bank of Scotland had been waiting for the settlement to pay its first dividend since it was bailed out by the taxpayer. Royal Bank of Scotland has agreed to pay $4.9bn (£3.6bn) to settle a US Department of Justice (DoJ) probe into the mis-selling of mortgage-backed securities before the financial crisis. The penalty, which was announced in principle in May, is the largest imposed by the DoJ for financial crisis-era misconduct. "Many Americans suffered lasting economic harm as a result of the 2008 financial crisis," said acting associate attorney general Jesse Panuccio. "This settlement holds RBS accountable for serious misconduct that contributed to that financial crisis." RBS, which remains 62.4% owned by the taxpayer, is not alone in paying to settle claims of mis-selling toxic debt. HSBC, Europe's biggest bank, agreed to pay $765m earlier this month and Barclays said it would pay $2bn in March.- Sky News Tuesday 14 August 2018.
IBAS Comment: We have now 'seen' how RBS GRG managers have been allowed to avoid any 'sanctions' in the UK - the FCA now implies that their hands are tied - can we take the FCA seriously any more?
What is obvious to me and many others, is that the various reports have been 'sanitized' to 'contain' and 'nullify' what was a continuous financial abuse of small and medium sized businesses. That financial abuse was concealed for many years under the FSA and FCA regulatory umbrella.
Most of the individuals who caried out those actions and abuse on SMEs continue to work in the banking industry - in fact most of the GRG staff are still involved in the bank's own business debt collection departments now. That means the 'bad apples are still in the barrel' - so how does that all work for the future?
In my view the various delays by the FCA and the 'engineered' reports do not take away the 'smell' of corrupt and out of control bankers, (reinforced by the DOJ's comments in the article above) who were deliberately targetting businesses some only potentially in distress for profit to the bank - by deliberately 'miss stating' the bank's intention - when restructuring was not the objectice at all. 'Miss stating' to me in these matters means 'fleecing', 'conning', 'cheating' and deliberately lying by the Bank's relationship manager's when forcing businesses into the GRG unit's clutches for that unit to then deliberately plunder their resources using futher misrepresentations to those businesses.
UK businesses deserve much better business representation than has been evident from this costly charade plus a more efficient regulator who will properly regulate and enforce on those who make the dangerous and costly banking decisions (i.e. PPI, SWAPS, RBS/GRG) which have then also cost so many businesses their future and often homes and families.- Eddy Weatherill – IBAS
Please note: We remove editorial links once we are aware they have ceased to function and remove content pages which may then be retained purely for our member's use and for IBAS research. Due to the large number of links over a number of years we would be grateful if those finding 'inactive' editorial links would email us - so that we can then remove them.
20th May 2018
With the FCA emphasis appearing to be focussed on the larger and more complax business banking complaint 'cases' - the question of whether the Financial Ombudsman Service can be effective in managing/investigating or determining larger and more complex cases requires answering.
My comments made on 19th January 2011 now appear completely relevent to the 'debate'.
Seven years on from those comments IBAS provided our input to the FCA on their DP15/7 The FCA Consultation on SME access to the Financial Ombudsman Service and feedback to DP15/7: SME as Users of Financial Services.
Our response to the FCA on 20th April 2018 outlines IBAS observations and current thinking on business banking dispute cases requiring an Independent Tribunal (not the FOS). See IBAS Response and feedback to the FCA on SME as Users of Financial Services and the complaint (provided with it) alleging an ex RBS senior manager 'decided' an RBS/NatWest FOS case in favour of RBS/NatWest whilst he was employed as Ombudsman.
Also on 19th January 2011 - I wrote the following:
"Although the FSA has imposed some bank fines - if only as a reminder that there is a regulator of banks - the scale of the problem is truly immense and the damage created by banks and bankers equally immense. The banks have got away with no regulation for far too long and because they are now 'set in their ways' they require a severe shock - each and every time they break the rules - the banks need convincing by regulators that they cannot continue cheating their customers and if they do they will receive a severe dose of regulatory medicine in return. Only when bank customers can see hard evidence of banks and bankers being punished for their past activities ( of which some appear criminal) and for which all consumers are now paying a very heavy price, can the Financial Services industry start to rebuild consumer confidence in what they have to offer.
UK regulation is still not stopping banks from cheating customers. Treating Customers Fairly (TCF) for many bankers is just a joke phrase. The FSA (Note: this is now the FCA) needs to enforce the Principles 1 - 11 published as being the minimum standard which is now required of bankers - to much greater effect. Our experience on business banking case work is that a number of banks are still treating the complaints as they always have - ignore, deny, and 'fob off'. It will take many years of Regulation (at this pace) before the banking industry shows any sign of a return to true values of integrity and honesty.
Also, how does the Financial Ombudsman Service actually perform in this arena - Is it a banker's servant and too close to bankers? - Can the FOS investigate bank cases effectively? They have the tools, but do they have the desire or the brief to use those tools? More importantly are they allowed by the banks to do so? - Where is the link between the FSA and FOS so that the FOS passes cases which demonstrate the bank's lack of awareness or use of the FSA principles onto the FSA? We have seen no evidence that this connection either exists or that it is effective in any way. These questions are being asked now as we and many others question whether the banks manipulate too many entities for their financial benefit" - 20th May 2018 - Eddy Weatherill IBAS ceo
See IBAS Response and feedback to the FCA on SME as Users of Financial Services
Financial Ombudsman Service will conduct an independent review - following accusations that some consumers' claims were not decided correctly. The move follows an investigation by Channel 4's Dispatches into the service.
The programme suggested some staff with inadequate training or knowledge were making decisions on complaints. It also raised concerns that pressure to resolve cases quickly may have led to banks being wrongly favoured.
The review was announced after Nicky Morgan, who chairs the Commons Treasury Committee, wrote to Caroline Wayman, chief ombudsman and chief executive of the service. Ms Morgan said it was "troubling" that some cases may not have been decided correctly. - 23rd March 2018 - BBC Business News
A Dispatches undercover investigation at The Financial Ombudsman Service - found that staff with inadequate training or understanding of financial products are judging cases, with some having reached decisions in favour of the banks, without properly reading case files. This could mean hundreds of thousands of cases may need to be looked at again. NEARLY half a million PPI claims could have been wrongly rejected by the Financial Ombudsman Service. - 12th March 2018 at 8pm Channel 4 - Dispatches Undercover: Who’s Policing Your Bank?
Santander chief still earns £1.8m for role with toxic RBS unit, despite quitting controversial job three years ago - Santander's chief executive is being paid £1.8million a year for a job which oversaw a toxic unit at Royal Bank of Scotland – despite leaving the role four years ago. He gets the seven-figure sum to compensate him for bonuses which he gave up when he jumped ship from RBS. He joined RBS in 2009 as head of risk and restructuring. One part of the role was to oversee the Global Restructuring Group, which loaded struggling firms up with toxic fees. The scandal at GRG ran until 2013. The revelation will spark fury because the money relates to his time as head of risk and restructuring at RBS, a role in which he was responsible for overseeing its notorious Global Restructuring Group. He was paid £4.7million for running the bank last year according to its annual report. But the small print reveals he was also given £1.8million as a buy-out for RBS bonus awards which he lost when he was poached. It is the third such payment handed to him, meaning he has picked up £5.4million from the deal so far. It is understood he will receive one more £1.8million payment this year. Because the money is being paid by Santander, it is not subject to the clawback rules which would have applied at RBS – meaning it is not possible to recover the cash should doubts emerge about his conduct while working there. The married father of two, who lives on a farm in rural Kent, has faced questions sincehe was blamed in Parliament for failings at the GRG. A Santander spokesman said: ‘pay and bonus are agreed by our parent Santander Group and the Santander UK remuneration committee and board, based on performance which was evaluated as outstanding this year. The buyout is a contractual entitlement that was agreed when he was appointed to Santander UK.’ - 5th March 2018 - Mail Money
IBAS Comment: He got out of RBS at a very convenient time for him and at a time when GRG’s failings were being heavily publicized. Unfortunately, the primary instigators of the actions of the RBS/NatWest/GRG UK business plunderings are still at large (and some still not identified) but no doubt earning well. Santander, the UK arm of the Spanish finance giant, is trying to position itself as ‘the bank of choice for UK companies’. Its UK boss paid £4.5million last year, and its head of commercial banking held key roles at RBS at a time when it was found by an official report to have plundered small firms for fees. The irony of their position and others who remained at the bank (when viewed against the many GRG victims now seeking retribution or restitution) for overseeing what was a cynical plundering by RBS GRG of UK Businesses beggars belief. Of course, Santander and RBS do have a history of closeness and connected business dealings. GRG victims have not been so lucky and now face a bank still in denial with a regulator slowing down any action to prosecute those who were responsible for GRG’s deliberate and concerted actions against UK Businesses - Eddy Weatherill – IBAS
Lloyds TSB ‘bent own auditor rules’ - Bank shifted £800,000 out of PWC accounts, court documents claim. Lloyds TSB agreed to “remove” £800,000 of fees due to be paid to PWC from its 2008 accounts in order to avoid breaching internal rules governing auditor independence, according to documents revealed in a High Court battle. The bank indicated that it would move fees due for “independent business reviews” of troubled companies conducted by PWC to a previous accounting period so that it could keep awarding the accountancy firm lucrative work without breaching a £2 million limit imposed by Lloyds’ audit committee, internal emails suggest. - 8th March 2018 - The Times
IBAS Comment: Auditor Independence or rather the alleged lack of it and auditor’s ethical conflicts are currently in the spotlight following Carillion’s spectacular failure in the construction industry and an immediate ‘fall-out’ for the many companies who lost money sub contracting to Carillion and who may well go bust themselves. However, the cases of alleged lack of auditor’s independence and unethical actions and standards (as far as any reasonable persons would think) do start to mount and the ‘smell’ of money corruption pervades the atmosphere, growing year on year - although it still appears the regulators have yet to see it, hear it, smell it, or speak and do something about it. - Eddy Weatherill - IBAS
RBS makes first profit in a decade - RBS ceo interviewed and questioned very thoroughly on GRG Report - 23rd February 2018 - Channel 4 News – Business Editor
IBAS Comment: RBS published their profit in the same week as the GRG Report was finally published by the Treasury Select Committee. It is obvious that the GRG Report was ‘held back' by the FCA - I cannot see any other explanation than that was to assist the bank. The GRG Report made “tough reading” for RBS ceo. He says: "We just didn't look after them well enough" - Try, you didn’t look after them at all - that would be much more accurate. The great number of businesses thrown into chaos and destruction by RBS and NatWest using the GRG Unit is totally inexcusable. The Report now shows that RBS/GRG ‘rip off’ tactics were neither ‘turnaround’ nor TCF but an organized bank strategy which would destroy thousands of businesses (now well documented) who were ‘herded’, lied to and cruelly sent to business ‘hell’ for the bank to exploit for profit and finally destroy (in many cases) all for fat profits and bonuses (yes, they were paid bonuses as well). Some of those targeted businesses had merely complained about their business managers.
Whilst the RBS ceo may not be personally responsible for those decisions - others were formulating those decisions and coordinating a systematic financial exploitation of UK Businesses in a targeted, sustained, mass looting and asset theft. The individuals responsible for those crimes against UK Businesses should now be held fully accountable. The definition of theft is: ‘A person is guilty of theft if he dishonestly appropriates property belonging to another with the intention of permanently depriving the other of it’.
It appears logical to many that the next actions against the RBS/NatWest GRG perpetrators (who thanks to the FCA have had another two years grace, whilst avoiding any responsibility) is that they face criminal prosecution/s. This debacle has a much wider value than the HBOS Reading fraud and has affected a great many more people and businesses - So, let’s see the RBS/NatWest GRG perpetrators ‘cut from the herd’ named and shamed and then properly dealt with - as until they are, this debacle will not be over. - 25th February 2018 - Eddy Weatherill - IBAS
See what RBS were saying in 2014 and also what the GRG whistleblower said - Among other revelations, the whistleblower claims:
"– GRG operatives were told to intercept payments from businesses and transfer the money instead to RBS to reduce the size of the businesses’ loans.
– GRG had complete control over customers’ accounts and weren’t answerable to any other part of the bank.
– GRG could oversee Natwest, RBS and Coutts customers, which technically they weren’t supposed to do, but which staff did anyway."
(IBAS Comment: On the 'other revelations'' above - we would endorse all of those from our experiences of NatWest and RBS GRG 'case files')
An RBS spokesperson said: “GRG successfully turns around the vast majority of businesses it works with." - That was completely untruthful - it was a minority!
(IBAS Comment: *the facts prove that RBS comment was a further completely untruthful 'smokescreen' as the Report published by the TSC on 20th February 2018 shows)
Who presided over the RBS scandal? - FCA must find a way to bring to book those who orchestrated a systematic and endemic culture of screwing customers.
The report for the Financial Conduct Authority from the specialist agency Promontory is commendably clear that accountability should go to the top.
The failings “were not" one-off staff errors.
Rather, GRG and RBS failed “to put in place the appropriate governance and oversight procedures”.
GRG management “was aware (or should have been aware) of these issues”.
There was “an intentional and co-ordinated strategy” to focus on GRG’s commercial objectives and to place “inadequate weight” on the interests of customers.
The Promontory report doesn’t point fingers at senior individuals, since that is the FCA’s job.
The regulator, which seems to have accepted the basic veracity of the report, must now complete its “focused” investigation as speedily as possible
. - 21st February 2018 - The Guardian
IBAS Comment: At last some common sense. Well done Nicky Morgan and her committee. The TSC have seen for themselves just how disgraceful RBS/GRG conduct was purely for profits. Numerous businesses have been ripped off - their owners and directors commercially and then personally financially destroyed (whilst feeling completely impotent) and purely because of profiteering and a rogue unit's 'secret agenda' - whilst the 'regulators' (and that includes the FOS who should have seen what was going on from the NatWest/RBS cases sent to them) sat firmly on their hands - another PPI type rip off finally exposed for what it was! Now - that mess needs clearing up. - 20th February 2018
Treasury Committee publishes RBS-GRG report
20 February 2018
The Treasury Committee set the Financial Conduct Authority (FCA) the deadline of 16 February to publish the skilled persons’ report (Section 166) into RBS’ treatment of small business customers in its Global Restructuring Group (GRG).
RBS Group's treatment of SME customers referred to the Global Restructuring Group (PDF 20.67 MB)
If they were unable to meet this deadline, the Committee ordered the FCA to send the report to the Committee by the same date. The FCA did not publish the report on 16 February, so therefore sent it to the Committee.
The Committee has today agreed to publish the final, unredacted report immediately.
Commenting on the publication, Mrs Morgan said:
"The findings in the report are disgraceful. The overarching priority at all levels of GRG was not the health and strength of customers, but the generation of income for RBS, through made-up fees, high interest rates, and the acquisition of equity and property.
The Committee has not taken the decision to publish lightly. Normally, reports prepared under section 166 are confidential, but there is overwhelming public interest in bringing transparency to what happened at GRG, given the earlier leak of the report, and in ensuring that everyone can see, and know that they are seeing, an authentic and verified copy of Promontory’s original report.
We have today published the terms of reference for our inquiry into SME finance. We’ll examine what must change to prevent what occurred at GRG from ever happening again, and how to restore confidence among SMEs in banks as a source of finance. I encourage all those with views to submit evidence.
As well as continuing to monitor the FCA’s further investigation into GRG, we’ll keep a close eye on RBS’ Complaints Process to determine whether it is providing the fair and reasonable compensation that has been promised to mistreated customers. Any person referred to in the report is invited to make any observations to the Committee." - 20th February 2018 - TSC
MPs use parliamentary privilege to publish report on 'disgraceful' RBS unit - The Treasury Committee cites "overwhelming public interest" in releasing the full report on the bank's treatment of small firms. MPs have taken the unusual step of using parliamentary privilege to publish a regulator's full report on Royal Bank of Scotland's controversial Global Restructuring Group (GRG).The Treasury Select Committee had demanded the Financial Conduct Authority (FCA) publish, or hand over, the unredacted version by Friday last week. Only a limited summary had previously been disclosed. While the watchdog did comply, it still refused to publish the whole document it had commissioned, continuing to cite a lack of legal consents.The chair of the powerful committee, Nicky Morgan MP, confirmed on Tuesday that it had unanimously agreed to publish the document given "overwhelming" public interest.She described the findings as"disgraceful".- 20th February 2018 - Sky News
'Secret' report into RBS published - After months of wrangling, MPs have released a report by the financial regulator which said a unit of RBS mistreated thousands of small firms. The Global Restructuring Group (GRG) was marketed as an expert service that could save a business, but according to the report took "inappropriate" action. Nicky Morgan, chair of the Treasury Committee, said the findings in the report were "disgraceful". RBS said it was "deeply sorry" for its treatment of businesses in the GRG. The contents of the report were first disclosed by the BBC in August last year. The Financial Conduct Authority (FCA) had refused to publish the report, blaming legal reasons, but after a meeting, MPs on the Treasury Committee voted to publish it. Ms Morgan said MPs had not taken the decision to publish lightly, as normally such reports are confidential. However, she said there was an "overwhelming" public interest in its publication. "The findings in the report are disgraceful. The overarching priority at all levels of GRG was not the health and strength of customers, but the generation of income for RBS, through made-up fees, high interest rates, and the acquisition of equity and property," she said. The GRG operated from 2005 to 2013 and at its peak handled 16,000 companies. Companies were referred to it when they skipped a loan repayment or suffered a significant drop in sales or profits.- 20th February 2018 - BBC Business News
Santander bosses engulfed in RBS scandal fallout: Pair were overseeing controversial division that plundered troubled small firms for fees. The Mail on Sunday last week revealed damning details from a suppressed report into abuses of small firms by GRG, which was supposed to help troubled businesses back to health but preyed on them instead. Two of the senior managers overseeing GRG at the time are now at Santander – where they are trying to beef up the bank’s lending to small firms.
The Mail on Sunday last week revealed the findings of the report, which lifted the lid on RBS’s bullying and exploitation of its vulnerable customers. In one case bankers plotted to help themselves to the stock of a bankrupt shop. Another memo urged bankers to let some customers ‘hang themselves’.
The FCA could in theory decide that this pair are not ‘fit and proper’ people to hold senior roles in a British bank. The Promontory report carried a foreword by its chairman, who chaired the Financial Services Authority before the crisis.
In the foreword to the full report, he backs calls for an independent Ombudsman or Tribunal for small firms in conflict with their banks, for which The Mail on Sunday has been campaigning. He said small businesses should have ‘wider access to independent dispute resolution and redress’.
The Treasury select committee will this week decide whether to publish the full report into RBS in what could prove to be another parade of its worst failings. Once that is done, the real business of finding the bankers accountable for the behaviour will begin. - 17th February 2018 - Financial Mail on Sunday
See also: RUTH SUNDERLAND: At last, after three years, the truth RBS tried to hide - but 'Maxwellisation' may hinder justice for GRG victims
City watchdog hands full report on RBS turnaround unit to MPs - MPs on the Treasury Committee will decide on Tuesday if they are to release the unredacted version using parliamentary privilege. Andrew Bailey's letter to Treasury Committee chair Nicky Morgan said: "I do want to make it clear that it is not our intention to frustrate or impede the work of the committee, quite the reverse in fact, and with that in mind we are providing the report as required.”
While he has previously pleaded the full report should not be placed in the pubic domain - at least not yet - the committee is to meet on Tuesday to decide its next move. Mrs Morgan said: "At that meeting, I will be asking members to agree to publish the final, unredacted report under parliamentary privilege as soon as possible." - 16th February 2018 - Sky News Business
IBAS Comment: Having now seen the Full Report, we understand the FCA's desire to withold it (and they continued to do so).
Hopefully, the Treasury Select Committee will now release the S166 Report for everybody to digest, as there is no doubt that RBS/GRG was a rogue outfit with a profit centre - plundering UK businesses who had the audacity to even question or complain about the bank's service or fees in any way (as that 'complaint' was enough for RBS or NatWest to transfer their customer's accounts into GRG).
FCA as Regulator for banking does not come through this debacle with any credibility, nor does the failure evidenced increase confidence in the FCA. The reverse is the case as 'common sense' and conduct issues appears to have been sadly lacking. IBAS was aware of the RBS and NatWests desire to use complaints as a 'platform for plundering' by GRG many years ago and if we were aware of it - that should also have been apparent to the FOS, had they looked deeply enough or investigated the RBS NatWest business complaints they received.
Now it's been documented by Promontory and 'signed off' maybe, the FCA and Government will take this matter more seriously. RBS NatWest GRG deceptions were carried on for far too long, without intervention or any actions by the regulator, despite the lack of any TCF by GRG (as has now been documented by Promontory). The FOS has not proved capable of business banking investigations and the FOS further failure in this debacle may also be due to the numbers of ex bank employees who also have bank pensions with bank allegiances within the FOS 'system'.
UK businesses deserve better and now require an Independent Tribunal not the FOS. - 18th February 2018 - Eddy Weatherill - IBAS
The FCA comments after the RBS GRG review were that it (the review) also recommended that small businesses are given more protection in their largely unregulated dealings with banks which "highlighted a gap in support for smaller businesses with genuine grievances about business banking conduct issues that could benefit from impartial assessment and quick resolution".
FCA chief executive said it was investigating the report and "focussing on whether there is any basis for further action within our powers".
He also pointed to the lack of regulation under which it (The FCA) might act and said: "Commercial lending activity is largely unregulated in the UK, and there are no 'conduct of business' rules against which to assess GRG's treatment of SME customers.
"We expect high standards from the firms we regulate, but we cannot set or enforce these high standards in areas of unregulated activity carried on by these firms.
"The FCA will make a constructive contribution if invited to do so by lawmakers but ultimately it is for Parliament to consider and approve recommendations about widening our statutory remit."
So, the Government, who effectively owns 70% of this bank and already knows the review has been delayed (repeatedly) and ʻsanitizedʼ to allow RBS to reorganise and to dilute the claims against it (whilst the customers destroyed by this bank are left to wither, wait and die) again allows this bank to continue to deceive itʼs customers and the Treasury Select Committee members, even when the bank has been caught with its ʻhands in the customers pocketsʼ (repeatedly) and many businesses have already ʻdiedʼ and also been dissolved.
See: 3 Years On RBS GRG - Where Are They Now?
Back in that sunny summer of 2014, there was some really strong live sport on for financial journalists. It was the infamous appearanc of RBS/GRG's two senior managers, on Tuesday 17th Jun at the Treasury Select Committee (TSC). (Q526 to Q656 on RBS/GRG)
One helped to identify which businesses were ripe for harvest:- It will be formed by a combination of the relationship manager who will see an event, some deterioration in business performance, a particular contract that is lost, excessive use of overdraft, excessive limits, behaviour that is generally— [interruption]
It would be very easy to blame the senior managers, but the culture is carried out by the boots on the ground. In fact, another bank, HBOS, took the decidedly cowardly option of blaming “bad apples” / “boots on the ground” on the Reading Six fiasco which resulted in criminal convictions and porridge for their staff. - P.C. Dettmann - Z Review - 9th August 2017
The Overall Business Principles 1-11 published by the FSA Handbook (as excerpt shown below) stated:
The FSA have 11 Principles which are general statements of the main regulatory obligations that apply to every authorised firm. The Principles set out in simple terms the high level standards that all firms must meet.
If your firm contravenes one or more of the Principles, it could face enforcement action, this could, for example, result in your firmʼs authorisation being removed.
It is vital that you are aware of these Principles and ensure your firm implements them and continually reviews that these standards are being maintained.
The FSA has a wide range of powers at its disposal to enforce adherence to the principles including withdrawal of approval for regulated businesses, prohibition of individuals, interventions, fines, public censures and private warnings.
FSA Principles of Business
1. Integrity - A firm must conduct its business with integrity.
2. Skill, care and diligence - A firm must conduct its business with due skill, care and diligence.
3. Management and control - A firm must take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems.
4. Financial prudence - A firm must maintain adequate financial resources.
5. Market conduct - A firm must observe proper standards of market conduct.
6. Customersʼ interests - A firm must pay due regard to the interests of its customers and treat them fairly.
7. Communications with clients - A firm must pay due regard to the information needs of its clients and communicate information to them in a way which is clear, fair and not misleading.
8.Conflicts of interest - A firm must manage conflicts of interest fairly, both between itself and its customers and between a customer and another client.
9. Customers: relationships of trust - A firm must take reasonable care to ensure the suitability of its advice and discretionary decisions for any customer who is entitled to rely upon its judgement.
10. Clientsʼ assets - A firm must arrange adequate protection for clientsʼassets when it is responsible for them.
11. Relations with regulators - A firm must deal with its regulators in an open and co-operative way and must disclose to the FSA anything relating to the firm of which the FSA would reasonably expect notice.
Treating Customers Fairly - The way forward as outlined in the FSA 26.03.09 speech
The FCA ʻtook overʼ Banking Regulation in 2012 from the FSA and the FSA Principles were then adopted by the FCA - but where is the evidence of RB STreating Customers Fairly now - where is the evidence of the Conduct result from the “more intrusive supervision on conduct issues, and a more cohesive assessment of conduct issues and risks to fair treatment of customers posed by the firm.” - with regards RBS and GRG?
The FCA now reflects on: “whether there is any basis for further action within our powers” and “pointed to the lack of regulation under which it (The FCA) might act”.
Does the FCA not consider that RBS and GRG's institutional deception and thefts from the many UK Businesses has breached the very core of the Overall Business Principles 1-11? on which the ʻFSA has a wide range of powers at its disposal to enforce adherence to the principles including withdrawal of approval for regulated businesses, prohibition of individuals, interventions, fines, public censures and private warnings.ʼ - that comment (as published by the FSA handbook) applied to the FSA at that time - surely the FCA must have a much wider remit now?
Exactly how much more evidence does the FCA require to do something of any merit for UK Business to protect them from further banking abuses?
Having seen a good number of RBS cases since RBS Specialised Lending Services was replaced by GRG around 1992 - the editorial 3 Years On RBS GRG - Where Are They Now? is a fair comment on what IBAS know was ‘direct targeting’ of businesses by the RBS and where bonuses were used to encourage RBS managers to ‘drive’ businesses into GRG’s clutches. By ‘introducing’ GRG the bank knew they could immediately exploit that position and impose much higher interest rates, costs and fees and also effectively ‘take over’ the business.
This process became systemic as profits rolled in for the bank. GRG inflicted higher interest rates, costs and exorbitant fees immediately on businesses where they were ‘introduced’ and those higher charges and fees were ‘taken’ without notice, despite protestations about ‘cash flow’ being eroded. GRG actions proved in the end to be for the benefit of the bank in short term profiteering whilst many businesses were driven into insolvency.
Insolvency of the business then meant that business assets and property could be ‘taken’ cheaply by the bank to exploit the then distressed assets.
There is no doubt in our mind that Britain’s banks have made profit from distress or that the issues raised by GRG cases (along with the issues of SWAPS and PPI compensations) evidence a systematic plundering of UK business by the UK Banking Sector.
RBS misinformation and denial of information to it’s business customers has also been an ongoing and repetitive issue which IBAS has observed in case files since the launch of RBS GRG.
There is no doubt from the many case files seen over time that GRG was used (and that may well be evidenced in the full report when it is published) to ‘push ‘ vulnerable businesses ‘over the edge’ and that GRG was deliberately levying excessive fees and additional ‘fictional’ costs (which were not justified or properly documented) onto businesses whilst the customer was also repeatedly deceived by RBS and GRG staff into believing that they were going to be ‘saved’ by GRG.
The word ʻunregulatedʼ appears to be used as an excuse by the FCA whilst the FCA continue doing nothing for UK Businesses - when they are already aware that UK Businesses have been faced with ʻmafia typeʼ business practices and profiteering which go back to when GRG was formed and that other banks (seeing the success of GRG on increased profits for RBS) have copied and adopted the RBS GRG methods.
Wake up FCA - enough of the time wasting - act now - before the FCA gathers even more contagion from the RBS GRG deceptions - 15th February 2018 - Eddy Weatherill - IBAS
Secret emails implicate senior managers at RBS's controversial Global Restructuring Group
• Senior GRG managers were at the heart of a plan to plunder small firms for cash
• A release of emails show 'an undue focus by management on fee generation'
An official report into RBS's Global Restructuring Group found emails that put senior managers at the heart of a plan to plunder small firms for cash.
The FCA report's authors, financial research firm Promontory, said they made a decision early on in their review to look at appraisals of staff.
'This followed the release of various emails suggesting an undue focus by management on fee generation early in the relevant period,' the full unpublished report says.
An official report into RBS's Global Restructuring Group found emails that put senior managers at the heart of a plan to plunder small firms for cash.
The finding that priority was being given to squeezing fees out of customers, who they should have been helping back to financial health was included in a previous summary of the report.
But, in a highly significant omission, separate conclusions that management knew or should have known of the issue were excised from the published FCA summary.
The full Promontory dossier contains copious detail on reports produced for the GRG board.
These 'board packs' had a greater focus on financial considerations than on 'returning customers to satisfactory' – in other words, they paid more attention to making money for for the bank than on saving firms. - 11th February 2018 This is Money News
'Totally immoral':Former GRG boss raked in thousands in consultancy fees since leaving taxpayerbacked RBS
The FCA has said its investigation is almost complete and a decision on whether to take action could be announced within weeks. - 11th February 2018 This is Money News
FCA given deadline to publish RBS report - RBS's restructuring arm is accused of intentionally pushing small businesses towards failure to pick up their assets cheaply. The City watchdog has been given a deadline to publish its report into RBS's controversial Global Restructuring Group.
The Financial Conduct Authority (FCA) has been criticised for delaying the release of the report, which looks into allegations that the bank - still more than 70% taxpayer owned - mistreated small business customers. Only a summary has been published so far, although the full version has been leaked to the media and some MPs.
Treasury Select Committee chair Nicky Morgan has called on FCA chief executive, to publish the report or send a full copy to the committee by 16 February. Mrs Morgan said: "A version of the report is in the hands of third parties, it has been selectively reported by the media, and it may enter the public domain at any time.
"The FCA has lost control over the timing or content of further public disclosures from it. "For these reasons, the committee has requested that the FCA publish the final definitive version of the report, or send it to the committee, by Friday 16 February.
The FCA said publishing the report without the legal checks sets a worrying precedent and he asked MPs not to do so using their parliamentary privilege.
An interim summary of the review, published by the FCA, found 92% of potentially viable businesses that went into GRG had "experienced some inappropriate actions".
The FCA is also conducting a further investigation into RBS, which the FCA described as "well advanced" and weeks away from a conclusion. - 7th February 2018 Sky News
Revealed: State-backed RBS's role in collapse of Carillion - The taxpayer-backed Royal Bank of Scotland (RBS) tightened the terms of its funding to the stricken Government contractor Carillion three days before it was forced to call in liquidators. According to the witness statement, RBS informed Carillion last Friday that it wanted the company to pre-fund supplier payments made through the bank, which meant it would need to make those payments two days earlier than cashﬂow forecasts had assumed.
He said this negatively impacted Carillion's liquidity by between £2m and £20m. RBS, he added, insisted that this revised arrangement "would be in place until support from [the Government] had been agreed and that the terms of this support would determine whether other uncommitted facilities with RBS would be withdrawn".
RBS is not the only lender to Carillion singled out in the witness statement.
Santander UK, another member of the committee of Carillion's biggest lenders, caused panic among the lending syndicate on 21 December by writing to the construction giant's suppliers notifying them of immediate changes to an Early Payment Facility (EPF) with the bank. "The company relied upon that EPF in order to assist it making payments to its suppliers," Mr Cochrane said. - 16th January 2018 - Sky News
Carillion was left with just £29m before going bankrupt - Carillion was in talks with the government since October as part of a desperate bid to stave off collapse, according to the chief executive. He says the construction giant was left with just £29m in cash by the time it went bust on Monday.
Until the last moments, directors still believed a rescue was possible, but banks became more demanding, he said.
The details are included in a document he has prepared as part of the insolvency process. - 17th January 2018 BBC Business News
Eddy Weatherill says: "2018 - New Year - New Threat to Construction and services. The collapse of Carillion will also mean the collapse of a great number of small business suppliers to Carillion in the construction and service industry sectors, as their business bankers put pressure on them to pay their company debts, created by Carillion's lack of payment and subsequent insolvency. Small businesses/SME's will now be placed under very severe bank pressure/s for payment of bank guarantees/Directors Personal Guarantees and bank mortgages".
Last modified: 11th September 2019