RBS ‘Dash for Cash’ scandal: 500 firms suing bank turn anger on regulator

The FCA, the financial regulator, launched a probe into the Dash for Cash scandal in January 2014. The report, produced by consultants Promontory and Mazars, was handed to the FCA in late summer but the regulator only confirmed receipt on October 5.

“We understand the S166 report recommends a compensation scheme for affected firms,” said Stewart. “It is essential that this scheme is independent and judicial, with full redress for consequential losses, and that it is not overseen by the FCA. We have no confidence in the regulator, given its previous compensation schemes have failed so many victims.”

The FCA stated: “There are a number of steps for the FCA to complete before we are in a position to share our final findings, which will include an assessment of all relevant material, of which the skilled person’s report is one. This has been a complex and lengthy review – it is therefore important that we do not rush the final stages of this process.”

Compensation for consequential losses takes into account missed opportunities to restore businesses back to the state they were in before the alleged wrongdoing occurred. Claimants have to demonstrate missed opportunities, slower growth, soured business relationships or even ill health brought about by financial difficulties.

Membership of the action group surged last week, with 68 additional firms signing up in response to reports that suggested RBS had an internal policy of tripping up viable business customers in order to profit at their 
expense. Membership rose to 479.

The action group intends to sue RBS and four of its former executives – 
including ex-chairman Sir Philip Hampton; Derek Sach, who ran the global restructuring group which took charge of distressed business customers; ex-head of the bank’s property arm West Register Aubrey Adams; and ex-business banking chief Chris Sullivan – for “unlawful means conspiracy”, alleging they conspired against their own customers. 

The Sunday Herald has run stories about how banks were maltreating business customers, including breaking the story of RBS’s global restructuring group (GRG), a division of the bank sometimes known as the “grim reaper” or “vampire” unit, where viable businesses claim they were abused and 
asset-stripped. 

Kalvin Chapman, a solicitor at lawyers Muldoon Britton, said the Dash for Cash email sent out by RBS regional director Rhydian Davies on October 9, 2008 proves that the bank and its senior executives had no scruples about effectively looting cash and assets from business customers of RBS, NatWest and Ulster Bank. “It only cared about scalping customers and bleeding them dry,” said Chapman.

All remaining senior GRG executives are understood to have been summoned to a showdown meeting in RBS’s 280 Bishopsgate headquarters in London tomorrow. A spokesman said he was unaware of the meeting and would not comment on whether individual bank executives would be punished ahead of the FCA’s report. 

One Scottish property developer said: “They took us to hell and back. They are a rogue organisation. It’s about time the regulator and the Government manned up to this. I have been screaming from the rooftops about it since 2012. I told Vince Cable about it then but he did sweet f**k all.”

The scandal, launched in a desperate bid to prevent RBS from total collapse during the financial crisis, just before it was saved by Government ownership in 2008, continued for several years after the bailout and a legal mopping-up exercise is still going on. It has led to homelessness, marriage breakdown, mental breakdown and suicides. 

Jon Pain, chief conduct officer at RBS, admitted: “In the aftermath of the financial crisis we did not always meet our own high standards and we let some of our small and medium-sized 

enterprise customers down. A number of our customers did not receive the level of service they should have done or, importantly, that they would receive now.” A spokesman denied any viable firms had been put into GRG for the bank’s profit. 

Kenny Riddoch, farming, Huntly
KENNY Riddoch was made homeless along with his wife and four young children in the summer after GRG pulled the plug on his business. 
The Huntly-based farmer and developer had his banking transferred to the restructuring unit in June 2008 after he sought extra funding to complete a development. The bank provided some extra finance, but also hiked his interest rates and saddled him with £10,000 a month in fees and charges. He was also made to pay for estate agents to revalue his portfolio of assets.
Riddoch lasted five years inside the “grim reaper” unit, fighting to save the business by selling off thousands of livestock to keep pace with charges that were escalated into millions of pounds, starving his businesses of cash.
“The thing that killed us was the costs they put into our business,” said Riddoch. “The interest rate swap they sold us cost me £1.1 million over five years. Their consultants cost me over £40,000 a year and the additional interest rates, which were what caused us to breach our covenants, gave rise to an additional rate of 28 per cent on our borrowings. I can’t understand how RBS is able to get away with this sort of thing.” 
Riddoch said GRG staff were arrogant and contemptuous. At a meeting in Edinburgh in 2013, he says that a GRG boss laid on the table a press cutting about a construction firm that had just gone bust. Riddoch asked: “Why are you showing me this?” He says the GRG boss replied: “Just so you know what’ll happen to you if you don’t comply with us.”
Despite raising £7.5m from Barclays to buy himself out of GRG, and despite an intervention from Angus Robertson MP, RBS put Riddoch’s businesses into administration in January 2013, effectively seizing his land, businesses and properties. Riddoch clung on until this year in the farm, refusing to leave until, finally, he and his family were forcibly evicted in the summer. Administrator KPMG is now pursuing him for £176,000 in back rent and RBS has obtained a freezing order over all his bank accounts, leaving him unsure how he will feed his family this winter. The family is now living with relatives. “It’s turned our lives upside down,” he said.

Stuart McCredie, music industry, Glasgow
When Stuart McCredie threatened to take his recording business from RBS to another bank in 2006, the bank transferred his account to its restructuring unit. Before that, McCredie says he had never missed a repayment. Terminal Music Ltd – whose West Regent Street studio was favoured by Belle & Sebastian, the Blue Nile, the Fratellis, Kelly Clarkson, Glasvegas and Susan Boyle – was then hit with fines, extra fees, and additional interest running into six figures. 
Leaked files confirm that RBS had a policy of pushing companies that were not in financial difficulties into GRG if there was a “breakdown of customer relationship”, or if a customer came up with “any proposed exit strategy” to rebank elsewhere. McCredie, who was never told what GRG was for or why he was there, says: “Our facilities were removed and our direct debits were bounced. They were strangling the business.” 
RBS also scuppered his repeated attempts to move to another bank by “stonewalling” over paperwork. “They were refusing to hand over any information – bank statements, loan statements or notices of charges.” He now believes the bank was not really interested in the recording studio but was eyeing up a related property portfolio.
After three years of extra fees, McCredie’s original £1.7 million loan had increased but, because of the opacity of the charges, he lost track of how much he owed. On Christmas Eve 2009, sheriff officers arrived at his Glasgow home to hand over a £2.1m charge for payment to his fiancée at their west end home while he was out shopping. This was despite the fact she had nothing to do with his business and was not a signatory on any of his business bank accounts.
GRG continued to refuse to provide a “full and final settlement” figure to enable McCredie to settle and move on. The business was eventually put into administration in June 2010. Fourteen jobs were lost and the studio fell silent. “I lost my business of 23 years, people lost their jobs and incomes, I stopped paying tax, national insurance, PAYE, commercial rates and so on. RBS have recovered less than £800,000 since they refused my £1.9m offer,” said McCredie. He is now preparing to sue RBS for losses of £5m as part of a group action alongside hundreds of other business owners who say RBS wrecked their firms. 

Rod Coffey, oil and gas, Aberdeen
An oil boss who once ranked among Scotland’s wealthiest men accuses RBS of “stitching up” his business. Rod Coffey owned Stable Holdings, a supplier of down-hole drilling tools to North Sea firms, but was put into administration by GRG. After he bought the company in 2006, Coffey says it became “the hot machine shop in the rental business”. In 2007-08, its turnover rose from £6 million to £29.5m and debt owed to RBS fell from £9m to £6.5m. Profits were £3m. 
But the credit crunch caused some cash-flow problems as suppliers’ credit terms evaporated, and Coffey asked RBS for extra working capital. RBS, using the pretext of a threatened lawsuit from a Canadian firm which had been mentioned in Stable’s annual report, transferred the business to GRG in June 2008. 
Coffey says GRG “forced fees on us, forced directors on us, drained us of cash, and drained us of confidence”. The bank also seized an 18 per cent stake in Stable, for which it paid just £2,000. In August 2009, GRG forced Stable into administration, appointing PriceWaterhouseCoopers as administrators. But Coffey claims PWC had little idea how to run the business. 
“They didn’t seem to appreciate how different an oilfield services business is from a property business or a farm.” In October 2009, PWC sold Stable to Dutch group Paradigm for £1.7m, with the loss of 120 jobs, even though Coffey says higher offers had been made to PWC. Coffey, 50, added: “I think it was a cold and calculated plan. We were their guinea pig in the oil and gas sector. For RBS and GRG it was a failure but what they did was that they learned what to do to other small oilfield companies.” 
PWC responded that the company was sold “for the best offer received in the best interests of the creditors”.

David Booth, property, Aberdeen
Aberdeenshire farmer and developer David Booth claims his businesses, lifestyle, and marriage were wrecked by GRG. In September 2007, he paid £1.25 million for a rambling bungalow and 40 acres near Peterculter with a view to building homes. At the credit crisis height in October 2008 the site was revalued at £1.85m. Booth says at the time he enjoyed a “fantastic relationship” with RBS and the bank urged him to go ahead with the purchase.
He says his original £1.35m RBS loan was repayable over five years with interest rolled up at one per cent above base rate. However, without his knowledge, he claims the bank altered it to a one-year loan. After the bank reneged on a promised £403,000 loan to another of Booth’s companies, his businesses were transferred to GRG in April 2009. 
The following month surveyors placed a £750,000 valuation on the site, implying it had shed 60 per cent of its value in eight months. This enabled RBS to characterise Booth as being in default.
GRG then forced Booth to pay interest of 29.5 per cent on the loan, while deducting £2,000 per month in fees. Booth said that “GRG helped themselves, without permission, to every penny” of the £92,000 he had on deposit. “I’m convinced their agenda was to destroy my businesses and seize my assets.”
Booth says RBS’s refusal to hand over bank statements for his companies between April 2009 and the sequestration financially paralysed him. “It meant I was unable to do accounts, do a tax return or rebank.” His life fell apart to the extent he was sequestrated in 2013, is separated from his wife and has not seen his 15-year-old daughter for four years. At a Court of Session hearing in December 2013, RBS obtained a summary decree to recover £1.7m, even though Booth says the site has a potential development value of £12m. Booth believes GRG personnel “thought they were so clever they’d never get caught. If you and I did what they did we’d be behind bars”.