Banks left with questions to answer after Panorama revelations, says Collyer Bristow

Stephen Rosen, partner and head of the financial disputes group at Collyer Bristow, has commented on a recent Panorama programme called ‘Did the bank wreck my business?’, which highlighted the sale by Lloyds Bank of customers’ loans to the US private equity company Cerberus Capital Management without the customers’ agreement. 

He said: ‘This is an extraordinarily serious development for customers and customer-bank relationships. The customer has gone from a relationship with a part-taxpayer-owned bank that holds itself out as being local and caring to a US organisation with billions of dollars of assets, connections to the US political elite and a very aggressive business model that couldn’t be further removed from that of a traditional UK lender.’

According to Rosen, customers, often small businesses, find themselves hamstrung by the legal documents that they have signed many years ago, which almost always places the power in the hands of the bank to transfer the debt to a third party without the customer’s agreement and indeed without even informing them until the transfer has taken place.

He continued: ‘So far as concerns RBS, and the conduct of GRG [Global Restructuring Group] towards SMEs, last night’s Panorama programme also provides more evidence against RBS for those claiming that GRG has used specially increased interest rates and high fees, together with the undervaluation of customers’ assets, which has resulted in many SMEs being driven into the ground. Similar allegations about the activities of the GRG have been made to us for many years now, so the evidence in the programme is not a surprise.

‘The time has come when the FCA should intercede to set up a scheme for RBS to compensate SMEs in the same way as the FCA has forced banks to compensate those who have suffered from the mis-selling of interest rate swaps and PPI.

‘The total compensation payments would be massive, but that is not a reason for the FCA to fail to act, nor a reason for RBS to fail to compensate those who can show that they have wrongly suffered financial loss as a result of GRG activities.’