London recycling company Bywaters has said it will fight “until the end” to settle a dispute with RBS bank over claims it cost the firm millions through an unfair interest rate hike.
RBS is currently under investigation by the Financial Conduct Authority (FCA), and a number of similiar allegations were made in a recent BBC Panorama programme from a range of other businesses.
Managing director John Glover said the company was badly affected as a result of a revaluation of its property value, on which basis loan repayments are calculated.
Bywaters claims the re-evaluation was too low and that as a result interest rates were increased by 2%.
Glover also claims the company was subjected to unfair charges. Bywaters is now pursuing legal action in an attempt to claw back £10m in estimated losses.
RBS said it did not want to comment to MRW. However, an article in the Standard in September quoted RBS as denying any wrongdoing, that it had not used a lower evaluation and that issues impacting Bywaters were related to the company’s performance.
Glover told MRW: “In July 2014 we moved away from RBS for banking, finance and property loans and immediately saved around £1m per annum.
“Bywaters progress since 2011 has been held back by the equivalent of £10m. With proper banking and public support Bywaters would have increased employment from over 400 full-time equivalent posts now to over 600.
“I expect there are other cases within the industry and this could be a major cause of recycling levels flatlining.
“The Government needs to give RBS a very short time to sort out all their wrongdoing and immediately recompense customers.”
Glover’s complaints centre around the behaviour of RBS’s Global Restructuring Group (GRG), which was set up to guide struggling businesses back into profitability.
But a large number of businesses have accused the GRG of aggressive tactics that put them in financial straits.
A report by Lawrence Tomlinson, entrepreneur in residence at the Department for Business, Innovation and Skills, accused RBS of charging small to medium businesses unfair and large fees and using “‘questionable property valuations to put businesses in trouble”.
RBS has strongly denied the allegations in the report.
The Government has referred RBS to the FCA, which is reviewing the allegations. The FCA will publish a report early next year.
RBS has also announced that the GRG will be wound down.
The BBC’s Panorama programme recently examined businesses’ complaints over unfair fees and valuations by RBS and Lloyds.
Lloyds also runs a service for struggling companies called the Business Support Unit.
Allegations made against Lloyds were denied by the bank, which said any fees were ‘appropriate and reflective of cost’, and that more than two thirds of customers ‘got back to viability’.
The Panorama programme also outlined allegations that financial consultants PwC and Lloyds colluded to increase financial burdens on customers.
Lloyds robustly defended any wrongdoing in its dealing with businesses and its relationship with PwC. PwC has also dismissed the allegations.
Speaking on the programme, business secretary Vince Cable said: “Of course I’m very alarmed, because good companies appear to have been put at risk, or in some cases destroyed, by banks’ behaviour.”
Bywaters began life in 1918 when Glover’s grandfather set up as a sole trader with a cart and horse in Highbury, north London. The present company was established in 1952. It now serves around 2,000 customers and is permitted to handle 800,000 tonnes of waste a year.