Refund of complex fees and the GRG complaints process

GRG used a variety of different fees or pricing tools to reflect the increased cost of risk associated with customers in financial difficulty, and sometimes charged fees that our SME customers were not familiar with, either because they were not commonly used, or because they were a bespoke pricing instrument.

For SME customers in GRG during the period under review some of the complex fees charged were not properly communicated or were not explained clearly enough. As a result, we decided to automatically refund them to save customers from further delay and ensure we could refund the fees quickly and demonstrate our commitment to addressing the issues of the past.

There were a number of steps in the process:

1. We wrote to all impacted customers to inform them that the fees they paid will be included in the fee review.
2. We reviewed the fees paid by customers in GRG to determine whether or not they are one of the fees that we have agreed to refund (see list below).
3. We wrote to customers to confirm any fee refunds that will be paid.
4. We paid interest on the refunded fees at 8% simple per annum from the date each complex fee was paid to a date which was 28 days following the date of the outcome letter.
5. We paid interest on the refunded fees at 8% simple per annum from the date each complex fee was paid to a date which was 28 days following the date of the outcome letter.

If you believe you paid a complex fee but have not yet received the refund from us, please contact the GRG Customer Helpdesk – please see FAQ D for contact details.

A customer was in-scope for the automatic fee refund if they paid any of the fees being automatically refunded and met all of the following criteria:

• a small or medium-sized enterprise (SME) customer
• managed in the UK or Republic of Ireland
• under the control of GRG during the period 2008-2013.

We believe we have now written to all customers involved with the refund of these fees, although some customers have not yet replied to us. The GRG Customer Helpdesk is available to provide support and if you have any questions regarding the refund of fees that have not been addressed in these FAQs you can contact the GRG Customer Helpdesk by emailing GRGCustomerHelpdesk@rbs.co.uk

Alternatively you can call the helpdesk using one of the following numbers:

Telephone (UK): 0800 0294 370

Telephone (ROI): 1800 882 779

International: +44 184 222 6142

Text Relay (UK): 18001 0800 0294 370

During the period 2008-2013, a number of different names or terms may have been used to describe the fees charged. But the list below outlines the fee types charged to SME customers in GRG between 2008-2013 that are included in the automatic fee refund:

• Management / Monitoring Fees: Fees charged to cover the increased costs incurred in relation to managing customers in restructuring situations. Usually this is a fixed amount per month / quarter.
• Asset Sales Fee: Fee charged on the sale of an asset to reflect the bank’s increased risk profile such as in circumstances where the customer’s cash flow could not meet the increased margin required by the bank on an ongoing basis.
• Exit Fee: Fee charged at the point of repayment to reflect the bank’s increased risk profile such as in circumstances where the customer’s cash flow could not meet the increased margin required by the bank on an ongoing basis.
• Mezzanine Fee: Fee charged to reflect mezzanine risk (i.e. the debt level above the bank’s standard senior debt appetite), usually expressed as a percentage of the mezzanine debt level.
• Ratchet Fee: Variable fee charged by the bank in relation to a repayment milestone.
• Risk Fee: Fee charged to reflect an increased risk profile in continuing to support a customer for a period of time following an event of default or failure to agree a formal renewal of expired contractual facilities.
• Late Management Information (MI) Fee: Fee charged for the late submission of management / financial information by the customer.

Yes. The fees paid under PPFAs were also included in the review. If the PPFA had not yet matured we contacted the customer to discuss releasing them from their obligations under the agreement.

We also contacted customers to discuss EPAs.

We refunded the complex fees that were paid by SME customers in GRG during the period 2008-2013. We refer to this as the automatic refund of complex fees. Before making any payments in this regard, we assessed each customer’s circumstances. Where there was no outstanding debt immediately due to the bank, offset was applied and the refund applied to reduce the amount of that outstanding debt. Any surplus after the application of offset was paid to the customer. Where there was no outstanding debt immediately due to us, the full refund was paid to the customer in the normal way.

Whilst we acknowledge that, generally, the bank could have better explained complex fees to customers, we have not conducted a review of the specific circumstances of each fee charged. We made the automatic refund of complex fees on a voluntary basis and have taken the decision that, where there was outstanding debt that was immediately due to the bank, offset will apply and the refund applied to reduce the amount of that outstanding debt (see FAQ G) above for more information). However, if you wish to speak to us about the basis upon which any specific fee was charged, or the basis upon which offset has been applied to it, you may do so. In the first instance please speak to the GRG Customer Helpdesk. The contact details are in FAQ D above.

• Facility Fees: These include Arrangement Fees, Facility Fees and Renewal Fees which are payable to the bank for arranging / amending / renewing new or existing facilities. These fees are usually paid upfront. However depending on a customer’s cash flow these fees may be paid on a deferred basis, over an extended period of time or on refinance or exit or from surplus asset sales proceeds.
• Excess Fee: Fee payable when the balance on a customer’s account is either: (a) overdrawn, with no formal facility in place; or (b) in excess of any agreed overdraft facility limits.
• Commitment Fee: Fee payable that relates to the provision of a committed facility.
• Covenant Waiver / Breach Fee: Fee payable when a documented facility covenant has been breached.
• Security Fee: Fee charged by the bank or re-charged via a third party to a customer to cover the cost of carrying out a legal review of security and / or facility documentation held.
• Third Party Fees: Any costs incurred in dealing with a third party while in GRG are not bank fees and do not form part of the AFR process. Should you wish to complain about third party fees charged whilst in GRG, you are able to do so by issuing a complaint under the GRG complaints process.

Margins are part of standard banking practice and are not complex. Therefore, margins were not in scope for the automatic refund of complex fees.

Where this was the case we wrote to the former directors / liquidators to make the offer, which was subject to restoration of the dissolved company.

If you’re not satisfied with the automatic fee refund process please contact the GRG Customer Helpdesk by emailing GRGCustomerHelpdesk@rbs.co.uk

Alternatively you can call the helpdesk using one of the following numbers:

Telephone (UK): 0800 0294 370

Telephone (ROI): 1800 882 779

International: +44 184 222 6142

Text Relay (UK): 18001 0800 0294 370

GRG complaints process in UK to close to new complaints on 22 October 2018

RBS is today writing to all remaining eligible UK customers to provide three months notice that the GRG complaints process will close to new complaints on 22 October 2018. The complaints process was opened to UK customers in November 2016 alongside the Automatic Refund of Complex Fees. The Automatic Refund process was completed in July 2017, with offers worth £115m made to 3,500 customers.

To date, the bank has received 1,230 complaints from the 16,000 customers eligible to use the scheme, and a further 165 complaints from those outside its scope. The bank has issued a conclusion in 803 cases, upholding 370 in full or part and making offers of £10,033,437 for direct losses. The bank is currently receiving about 6 complaints a week, a number that has been in decline since its peak of 35 a week in December 2016.

The process is overseen by an Independent Third Party, retired High Court Judge Sir William Blackburne. As at the date of his sixth quarterly report, Sir William had received 169 appeals and communicated a conclusion to 55 customers. He has upheld 15 appeals in full or in part and has awarded a total of £38,000 additional redress to be paid to customers.

It was announced on 10 May 2018 that the role of the Independent Third Party would be expanded to include appeals on consequential loss outcomes. To date, the bank has received 4 claims for consequential loss. If successful, consequential loss claims are likely, on average, to result in higher payments to customers than those for direct loss.

Customers who wish to make a complaint once the scheme has closed will be able to utilise the bank’s usual complaints procedure but will not be able to appeal to the Independent Third Party.

Both Sir William Blackburne and the Financial Conduct Authority have been consulted in respect of the closure of the complaints process.

Customers in the Republic of Ireland were first informed of the GRG complaints process two months after those customers in the UK. The Central Bank of Ireland will be consulted regarding the closure date for new complaints in the ROI.

Customers are able to make a complaint in respect of their experience if they were under the control of GRG in the period 2008 – 2013 and if they fall within the review’s definition of a small or medium-sized company operating in the UK or the ROI.

Chairman Howard Davies said:

“Throughout the GRG complaints process – which was first announced more than 18 months ago – our focus has been on putting things right for those customers who did not receive the level of service and understanding they should have done whilst in GRG.

“We have worked hard to ensure high quality and fair decisions have been reached in response to the issues raised. These have been subject to rigorous independent assurance.

“The number of complaints is continuing to decline and with the Independent Third Party agreeing to accept consequential loss appeals, we have concluded that this is the appropriate time to give our UK customers notice of its closure to new complaints."

Complaints data as at 13 July 2018

Appeals data taken from ITP 6th Quarterly Report

GRG complaints process in ROI to close to new complaints on 31 December 2018

On 28th September 2018, Ulster Bank Ireland wrote to their GRG customers who have not yet submitted a complaint, to provide three months notice advising that the GRG complaints process will close to new complaints on 31 December 2018.

The complaints process was opened to GRG customers in January 2017 alongside the Automatic Refund of Complex Fees process.

GRG customers operating in ROI are eligible to make a complaint under the GRG complaints process if they were under the control of GRG in the period 2008-2013. To date, 69 complaints have been received by the GRG complaints helpdesk, 53 of which fall within the scope of the GRG complaints process. 36 of these have been assessed with outcome letters issued. The Bank has upheld 15 complaints in full or in part, making offers of €234k for direct losses. The bank is currently receiving approximately one complaint a month, a number that has been in decline since its peak of approximately nine a month in June 2017.

For the Ulster Bank Ireland DAC GRG customers who recently received a letter for the first time (August 2018) informing them of the GRG complaints process and of their right to submit a complaint into this process, the closure date for receipt of their complaint has not yet been determined and they will therefore not receive a closure letter today. We are encouraging those GRG customers to submit their complaint in advance of the 31st December 2018, however we will write to them separately to advise them of the closure date when determined.

Customers who wish to make a complaint once the scheme has closed will be able to avail of the bank’s usual complaints procedure, including access to the Financial Services and Pensions Ombudsman appeals process but will not be able to appeal the outcome to the Independent Third Party.

Sir William Blackburne (Independent Third Party) has been consulted in respect of the closure of the GRG complaints process.

Complaints data as at 26 September 2018

Our original announcement published 8 November 2016

RBS is also responding to the FCA’s update on its review into the treatment of SME customers in the bank’s former Global Restructuring Group (GRG) between 2008 - 2013 and its summary of the Promontory Financial Group report.

As the bank has acknowledged, in some areas, it could have done better for SME customers in GRG. Specifically, the bank could have managed the transition to GRG better and should have better explained to customers any changes to the prices or complex fees it was charging. The bank accepts that it did not always communicate as well or as clearly as it should have done. The bank also did not always handle customer complaints well.

RBS notes that the FCA’s update confirms that no evidence was found that the bank artificially engineered a position to cause or facilitate the transfer of a customer to GRG or identified customers for transfer for inappropriate reasons and that all SME customers transferred to GRG were exhibiting clear signs of financial difficulty. The update makes clear that there were no cases where the purchase of a property by West Register alone gave rise to a financial loss to the customer and that there was no evidence of intent for West Register to purchase assets being formed prior to the transfer to GRG. It also states that, in a significant majority of cases, it was likely that RBS’s actions did not result in material financial distress to these customers.

As a result of the historical issues identified, RBS is taking two important steps for those SMEs in the UK and ROI that were customers in GRG during the period between 2008 - 2013. This activity is designed to address the bank’s failings.

A New Complaints Process for those customers in scope, overseen by retired High Court Judge, Sir William Blackburne. Sir William’s appointment as Independent Third Party adds a robust, transparent and independent step to the complaints process, should SME customers who were in GRG wish to complain about their treatment or challenge the bank’s decision on a previous complaint.

An Automatic Refund of Complex Fees paid by SMEs in the UK and ROI that were customers in GRG during the relevant period. This will save customers from further delay, ensure that the bank can start refunding fees more quickly and demonstrate our commitment to addressing issues of the past.

These proposals have been developed with the involvement of the FCA which agrees that these are appropriate steps for the bank to take. RBS will provide further details of the new complaints process on its website.

The bank estimates the costs associated with the new complaints review process and the automatic refund of complex fees to be approximately £400m, to be provided in Q4 2016. This includes the operational costs of both the fee refund and the new complaints process, together with the refund of complex fees and additional estimated redress costs arising from the new complaints process.

It is important to remember that the period in question, between 2008 - 2013, was a very challenging time for the bank and its customers. In 2008, there was an unprecedented increase in SMEs falling into financial distress and the number moving into GRG increased by around 400%. RBS lost more than £2bn from lending to SME customers.

RBS continues to cooperate fully with the FCA and remains keen to understand, and learn lessons from, any conclusions that the FCA draws in its review.  It would not be appropriate to comment further on that review until those conclusions have been published.

Ross McEwan, CEO of RBS said:

“We have acknowledged for some time that mistakes were made. Some of our customers went through what was a traumatic and painful experience as a result of the crisis. I am very sorry that we did not provide the level of service and understanding we should have done.

“Although the FCA review into the historical operation of GRG continues, we believe that now is the right time to deal with the areas where we accept some customers were let down in the past.  I am pleased that with the agreement of the FCA, we are able to announce a new complaints process overseen by Sir William Blackburne, alongside an automatic refund of complex fees paid by SME customers who were in GRG between 2008 - 2013.

“The culture, structure and way RBS operates today is fundamentally different from the period under review. We have made significant changes to deal with the issues of the past, so that the bank can better support SME customers in financial difficulty whilst also protecting the bank’s capital.”

CEO Ross McEwan on the FCA review update – Watch video

A) Why did you make the announcement in November 2016?

The steps announced in November 2016 were developed with the involvement of the FCA who agreed these actions were appropriate steps for us to take. At that time, we announced a GRG complaints process overseen by Sir William Blackburne alongside an automatic refund of complex fees paid by SME customers who were in GRG between 2008-2013.

B) What do I need to do?

We have provided the answers to a wide range of frequently asked questions that will hopefully address any initial queries that you may have.

There is nothing that you need to do with regard to the automatic fee refund process. During 2017 we wrote to those customers who we identified as being due a refund. These refunds have now been processed.

While the GRG Complaints process is now closed, a customer can still raise a complaint with the bank by following the process detailed below. Any new complaint now received will be reviewed by the bank’s Complaint Centre, not by the GRG complaints process, and there will be no option of appeal to the Independent Third Party.

Please follow the standard complaints process for your brand:

• NatWest
• RBS
• Ulster Bank Northern Ireland
• Ulster Bank Republic of Ireland

If you have any further questions you can contact the GRG Customer Helpdesk by emailing

GRGCustomerHelpdesk@rbs.co.uk

Alternatively you can call the helpdesk using one of the following numbers:

Telephone (UK): 0800 0294 370

Telephone (ROI): 1800 882 779

International: +44 184 222 6142

Text Relay (UK): 18001 0800 0294 370

C) What should I do if I need urgent support?

If your current circumstances dictate that you need to speak to us urgently then please contact us as soon as possible. In-scope customers should contact the GRG Customer Helpdesk by emailing

GRGCustomerHelpdesk@rbs.co.uk

Alternatively you can call the helpdesk using one of the following numbers:

Telephone (UK): 0800 0294 370

Telephone (ROI): 1800 882 779

International: +44 184 222 6142

Text Relay (UK): 18001 0800 0294 370

If you are not in scope, you should contact your relationship manager or if it is in relation to an existing complaint then you should contact your complaint handler.