A) Why did you review the complex fees paid by SME customers in GRG?
GRG used a variety of different fees or pricing tools to reflect the increased cost of risk associated with customers in financial difficulty, and sometimes charged fees that our SME customers were not familiar with, either because they were not commonly used, or because they were a bespoke pricing instrument.
For SME customers in GRG during the period under review some of the complex fees charged were not properly communicated or were not explained clearly enough. As a result, we decided to automatically refund them to save customers from further delay and ensure we could refund the fees quickly and demonstrate our commitment to addressing the issues of the past.
B) How did the automatic refund of complex fees work?
There were a number of steps in the process:
- We wrote to all impacted customers to inform them that the fees they paid will be included in the fee review.
- We reviewed the fees paid by customers in GRG to determine whether or not they are one of the fees that we have agreed to refund (see list below).
- We wrote to customers to confirm any fee refunds that will be paid.
- We paid interest on the refunded fees at 8% simple per annum from the date each complex fee was paid to a date which was 28 days following the date of the outcome letter.
- We paid interest on the refunded fees at 8% simple per annum from the date each complex fee was paid to a date which was 28 days following the date of the outcome letter.
If you believe you paid a complex fee but have not yet received the refund from us, please contact the GRG Customer Helpdesk – please see FAQ D for contact details.
C) How did you define an in-scope customer for the automatic fee refund?
A customer was in-scope for the automatic fee refund if they paid any of the fees being automatically refunded and met all of the following criteria:
- a small or medium-sized enterprise (SME) customer
- managed in the UK or Republic of Ireland
- under the control of GRG during the period 2008-2013.
D) What do I do if I have not heard from you?
We believe we have now written to all customers involved with the refund of these fees, although some customers have not yet replied to us. The GRG Customer Helpdesk is available to provide support and if you have any questions regarding the refund of fees that have not been addressed in these FAQs you can contact the GRG Customer Helpdesk by emailing GRGCustomerHelpdesk@rbs.co.uk
Alternatively you can call the helpdesk using one of the following numbers:
Telephone (UK): 0800 0294 370
Telephone (ROI): 1800 882 779
International: +44 184 222 6142
Text Relay (UK): 18001 0800 0294 370
E) What fees have been refunded?
During the period 2008-2013, a number of different names or terms may have been used to describe the fees charged. But the list below outlines the fee types charged to SME customers in GRG between 2008-2013 that are included in the automatic fee refund:
- Management / Monitoring Fees: Fees charged to cover the increased costs incurred in relation to managing customers in restructuring situations. Usually this is a fixed amount per month / quarter.
- Asset Sales Fee: Fee charged on the sale of an asset to reflect the bank’s increased risk profile such as in circumstances where the customer’s cash flow could not meet the increased margin required by the bank on an ongoing basis.
- Exit Fee: Fee charged at the point of repayment to reflect the bank’s increased risk profile such as in circumstances where the customer’s cash flow could not meet the increased margin required by the bank on an ongoing basis.
- Mezzanine Fee: Fee charged to reflect mezzanine risk (i.e. the debt level above the bank’s standard senior debt appetite), usually expressed as a percentage of the mezzanine debt level.
- Ratchet Fee: Variable fee charged by the bank in relation to a repayment milestone.
- Risk Fee: Fee charged to reflect an increased risk profile in continuing to support a customer for a period of time following an event of default or failure to agree a formal renewal of expired contractual facilities.
- Late Management Information (MI) Fee: Fee charged for the late submission of management / financial information by the customer.
F) Were Property Participation Fee Agreements (PPFAs) and Equity Participation Agreements (EPAs) included in this review?
Yes. The fees paid under PPFAs were also included in the review. If the PPFA had not yet matured we contacted the customer to discuss releasing them from their obligations under the agreement.
We also contacted customers to discuss EPAs.
G) Were all complex fees refunded?
We refunded the complex fees that were paid by SME customers in GRG during the period 2008-2013. We refer to this as the automatic refund of complex fees. Before making any payments in this regard, we assessed each customer’s circumstances. Where there was no outstanding debt immediately due to the bank, offset was applied and the refund applied to reduce the amount of that outstanding debt. Any surplus after the application of offset was paid to the customer. Where there was no outstanding debt immediately due to us, the full refund was paid to the customer in the normal way.
H) You have offset my refund of complex fees against outstanding debt and I don’t agree with this. What can I do?
Whilst we acknowledge that, generally, the bank could have better explained complex fees to customers, we have not conducted a review of the specific circumstances of each fee charged. We made the automatic refund of complex fees on a voluntary basis and have taken the decision that, where there was outstanding debt that was immediately due to the bank, offset will apply and the refund applied to reduce the amount of that outstanding debt (see FAQ G) above for more information). However, if you wish to speak to us about the basis upon which any specific fee was charged, or the basis upon which offset has been applied to it, you may do so. In the first instance please speak to the GRG Customer Helpdesk. The contact details are in FAQ D above.
I) What fees were not refunded?
- Facility Fees: These include Arrangement Fees, Facility Fees and Renewal Fees which are payable to the bank for arranging / amending / renewing new or existing facilities. These fees are usually paid upfront. However depending on a customer’s cash flow these fees may be paid on a deferred basis, over an extended period of time or on refinance or exit or from surplus asset sales proceeds.
- Excess Fee: Fee payable when the balance on a customer’s account is either: (a) overdrawn, with no formal facility in place; or (b) in excess of any agreed overdraft facility limits.
- Commitment Fee: Fee payable that relates to the provision of a committed facility.
- Covenant Waiver / Breach Fee: Fee payable when a documented facility covenant has been breached.
- Security Fee: Fee charged by the bank or re-charged via a third party to a customer to cover the cost of carrying out a legal review of security and / or facility documentation held.
- Third Party Fees: Any costs incurred in dealing with a third party while in GRG are not bank fees and do not form part of the AFR process. Should you wish to complain about third party fees charged whilst in GRG, you are able to do so by issuing a complaint under the GRG complaints process.
J) Did you refund the additional cost of margin increases?
Margins are part of standard banking practice and are not complex. Therefore, margins were not in scope for the automatic refund of complex fees.
K) Would I have received an automatic refund if my company is dissolved?
Where this was the case we wrote to the former directors / liquidators to make the offer, which was subject to restoration of the dissolved company.
L) What do I do if I’m not satisfied with the automatic fee refund process?
If you’re not satisfied with the automatic fee refund process please contact the GRG Customer Helpdesk by emailing GRGCustomerHelpdesk@rbs.co.uk
Alternatively you can call the helpdesk using one of the following numbers:
Telephone (UK): 0800 0294 370
Telephone (ROI): 1800 882 779
International: +44 184 222 6142
Text Relay (UK): 18001 0800 0294 370