Ulster Bank SME customers eligible to access €450m refund scheme

FIONA REDDAN Irish small and medium enterprise clients of Ulster Bank will be able to access a £400 million (€449m) scheme to reimburse fees to customers who claim they were mistreated by its small business restructuring unit.

Ulster Bank owner Royal Bank of Scotland said on Tuesday it would set aside the sum after years of defending itself against claims that its global restructuring group deliberately pushed some companies into bankruptcy so it could pick up their assets more cheaply.

Global Restructuring Group Ireland (GRGI) was a division set up to deal with SMEs who had borrowed between € 1 million and € 25 million and were in distress. About 76 per cent of loans moved to GRGI related to commercial property. By the end of 2013, GRGI had 248 employees managing more than 2,140 cases with a portfolio value of more than € 14 billion.

The decision follows a report into Ulster Bank’s treatment of SME debtors during the recession by law firm Mason Hayes & Curran. Published in 2014, the report focused on the work of GRGI, and looked into 1,965 customer “connections”, of which the law firm reviewed 32 files. The report cleared it of allegations that it was involved in “systematic and institutional behaviour” to put otherwise viable businesses on a “journey towards administration, receivership and liquidation”.

The issue was also of concern in the UK, and after a three-year investigation, Britain’s Financial Conduct Authority (FCA) cleared the bank over the most controversial allegations brought by hundreds of customers, who claimed the bank systematically killed off healthy businesses for profit in the wake of the credit crunch. The bank admitted some wrongdoing over the way it handled small businesses, while stopping short of claims they were deliberately pushed into administration.

“I am very sorry that we did not provide the level of service and understanding we should have done,” RBS chief executive Ross McEwan said in a statement. “We believe that now is the right time to deal with the areas where we accept some customers were let down in the past.”

Irish SME customers of the global restructuring group in the years 2008-2013 will now be entitled to access a new complaints process, overseen by retired UK high court judge Sir William Blackburne. In addition, they may be entitled to an automatic refund of fees.

“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,” RBS said.