Have the FCA been gagged by RBS v PAG?

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Posted in:Banking and Finance, Litigation|June 23, 2016 | Join the mailing list

To reiterate the question formally: is there a link between the release of the GRG Report and the Property Alliance Group (“PAG”) v Royal Bank of Scotland Plc (“RBS”) outcome?

To be able to properly opine on the above it is important to understand what we are referring when we say “PAG outcome” and the “GRG Report”:

  1. PAG outcome: Currently being heard in the High Court is the case of Property Alliance Group Limited (“PAG”) and the Royal Bank of Scotland Plc (“RBS”). The case (amongst other things) relates to whether RBS wrongfully transferred PAG’s borrowing to their Global Restructuring Group (“GRG”) and engaged in unlawful conduct whilst PAG was in GRG; and
  1. GRG Report: The FCA appointed Promontory Financial Group and Mazars to conduct an independent skilled persons report under section 166 of the Financial Services and Markets Act 2000 (“FSMA”) (“the GRG Report”).

The purpose of the GRG Report was to examine RBS’ treatment of business customers which the bank alleged were in financial difficulty and consider allegations of poor practice set out in the report by Dr Lawrence Tomlinson and referenced in Sir Andrew Large’s report – namely customers transferred to GRG.

As we have previously reported the GRG Report was completed, however, it was passed to RBS on 14 April 2016 for their input before its potential release into the public domain. The FCA has provided no further updates on the Report since that date.

The reality is that that the FCA does not have an obligation to disclose the Report to the public, only to provide a summary statement of its contents. It is unknown if the FCA will choose to make the Report publicly available or not.

Those that have been affected by GRG have a right to review the contents of the report. If an RBS customer is in the process of a litigated claim/dispute with RBS over their transfer to GRG then the non-disclosure of the Report is yet another bar to proper access to justice.

Link to PAG?

To date the PAG case is the first that has reached Trial in relation to RBS transferring a business’ lending to GRG. It has been suggested that the FCA is holding back the release of the Report until the outcome of the PAG matter.

Why? – The Report may contain evidence that could not be ignored by the Judge in determining the outcome of PAG and may assist other claimants who have cases against RBS.

Why? – A positive outcome in relation to PAG’s GRG claim could further destroy RBS’ reputation and would also increase the pressure for an FCA sanctioned Redress scheme for customers transferred to GRG. A GRG redress scheme could cost RBS billions of pounds.

Next Steps

We are continually disappointed by the ineffectiveness of the FCA, as we have seen first-hand the devastating effect that GRG has had on small businesses across the country.

The FCA needs to confirm the release date of the Report as soon as possible to provide certainty and potential closure to those affected by the actions of RBS and its GRG unit.

To find out more about the issues raised in this post, or to discuss any queries regarding GRG or the FCA get in touch with our Banking & Finance dispute team on help@berg.co.uk or call +44 (0) 161 829 2599.

The information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by berg or any of its partners or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.

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