Ulster Bank seeks to set deadline for SME redress scheme

Ulster Bank is seeking regulatory approval to close a compensation scheme for small companies whose businesses were negatively affected by being put into a controversial restructuring unit during the financial crisis.

Sources said the bank is in contact with the Central Bank of Ireland about agreeing a deadline by which customers will have to make a complaint on their treatment by the lender's now-defunct global restructuring group (GRG).

It follows on from Ulster Bank's parent, Royal Bank of Scotland, announcing on Friday that it will close its redress scheme to new complaints in the UK on October 22nd.

Ulster Bank said in documents submitted to the Oireachtas Finance Committee last month, seen by The Irish Times, that it had received 63 complaints from business customers claiming to have been mistreated after their loans were placed in the GRG unit.

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The RBS and Ulster Bank redress schemes were set up in late 2016 alongside a move to automatically refund complex fees charged by its GRG unit.

Systemic mistreatment

RBS originally set aside £400 million (€448m) two years ago for thousands of customers after the UK Financial Conduct Authority concluded the group was guilty of “systemic” mistreatment of distressed firms that came to it for help – though the watchdog cleared the bank of the allegation that it forced businesses into default for its own benefit.

RBS said on Friday that it had completed by last July the refunding of £115 million of complex fees paid by 3,500 one-time GRG customers.

However, it had only offered a total of £10 million of compensation to firms that had been negatively impacted by having their loans put into the GRG unit.

RBS said that it had concluded the assessment of 803 cases out of 1,230 complaints made as of last week. Some 370 of the complaints had been upheld in full or in part, the banking group said, adding that it was currently receiving about six complaints a week, compared to 35 a week at the peak in December 2016.

Businessman Bill Cullen launched a multimillion-euro legal action earlier this year against Ulster Bank and the receivers of his Glencullen Group, alleging that the bank and its GRG unit targeted his business.

A spokeswoman for Ulster Bank declined to comment on the bank’s plans to set a deadline for new complaints.

Complaints

A spokesman for the Central Bank said the regulator would “continue to engage with Ulster Bank Ireland DAC in relation to GRG Ireland customers”.

The Ulster Bank submission to the Oireachtas committee showed that of the 63 complaints it has received from former GRG customers, 29 had been assessed as of last month.

Of these one complaint was fully upheld and 10 partly upheld. Of the 18 complaints not upheld, five are under appeal with an independent third party.

Of 2,100 Irish businesses whose loans were put into Ulster Bank’s GRG division, 1,850 had their borrowings sold on, while 150 went out of business and 100 were transferred back to Ulster Bank, according to the document.