A £1bn claim against the Royal Bank of Scotland (RBS) is to be launched by more than 100 small businesses.
The claim is over allegations that the businesses were mistreated by the bank’s turnaround division.
140 small companies claim the bank profited after they were pushed into administration by its Global Restructuring Group (GRG).
This comes shortly after Credit Strategy reported a story revealing SMEs wrote of nearly £6bn worth of debt last year.
The legal team behind the case has a theory that GRG made additional and higher than usual charges to the businesses and these combined charges helped RBS pay off its bad debt from recent periods of financial pressure.
More than 90 percent of the companies said RBS imposed a range of excessive charges that jeopardised the stability of their business and almost 70 percent said it had put unrealistically low valuations on their business and assets.
The Financial Conduct Authority (FCA) has also been accused by the companies for sitting on a report it commissioned on GRG. A date has not yet been set to publish the report but the FCA has already shared the main points with RBS.
Last month chief executive of the FCA Andrew Bailey said the report was “not finished” but the small businesses are no longer willing to wait.
The legal team handling the case are proceeding on the basis of significant discounted and contingent fee agreements.
London based law firm, Humphries Kerstetter LLP, who specialise in high stakes commercial litigation and barrister chambers, 3 Hare Court Chambers, will represent the small companies.
A spokesperson for the businesses said: “We would encourage all affected businesses to contact us immediately, rather than wait for an FCA compensation scheme which may or may not be provided.
“RGL (management company working on behalf of businesses) is making quick progress in building its claim and we would urge businesses to contact us before it is too late.”
RBS declined to comment.