Charity accused RBS of "effectively stealing" £63,000
MP brands bank behaviour "scandalous"
FCA process also faces criticism
A charity which helps people with housing, debt and homeless issues is again facing an uncertain future and is being unable to help people at the lower end of society because the Royal Bank of Scotland is stalling on paying them compensation owed for mis-selling it a mortgage product.
For the second time in a year, Direct Help and Advice (DHA) has found itself at the mercy of RBS, which is delaying processing the claim and has given no indication when it might settle it.
DHA, based in Derby, were refunded £150,000 in January following a long-running battle with RBS, which finally admitted it had mis-sold the mortgage product, resulting in higher interest payments for the charity over the previous five years.
Despite that admission, the Bank is now seemingly refusing to settle the compensation claim - money the charity lost because of the Bank's mis-selling - leaving DHA struggling financially and unable to plan for the future.
Chris Williamson, MP for Derby North, said RBS's behaviour was "scandalous". He said: "RBS has a regulatory obligation to treat its customers fairly, which it has singularly failed to do with DHA.
"After accepting that that they mis-sold the product to DHA, RBS has displayed an imperious arrogance towards this small Derbyshire charity.
"This is not a generalised attack on the banking industry; it's a very particular criticism highlighting what I can only describe as scandalous behaviour.
"I will continue to press RBS to ensure that DHA obtain a swift, fair and final settlement."
Rafe Nauen, DHA chair of trustees, said: "DHA submitted their consequential loss claim, as it is known, by May 19th 2014 and we received the feedback from the Bank that it was 'comprehensive, well presented and clearly set out'.
"However, after having the claim now for over four months and even with constant chasing by us, the Bank won't even tell us when they will get back to us to have a meaningful discussion about it. We have a total claim of £350,000 made up of additional costs and losses caused by the Bank wrongly taking loan interest from us and then bullying the charity because of our financial predicament.
"We have asked for an interim payment of the clearly identifiable direct costs incurred by DHA of £63,000 that were driven by the Bank's mis-selling activity, which will enable us to begin to get back to providing our normal services, but they have even refused that.
"This is the working capital of the charity that the Bank has effectively stolen, which means the charity is unable to move forward. The Bank by their actions have placed great strain on the charity in eroding its reserves by their aggressive selling tactics years ago, therefore the Bank is still not putting right what the Bank did wrong."
Mr Nauen also criticised the failure of the Financial Conduct Authority to help it. He said: "Within FCA guidelines the customers who have been mis-sold to could also put in a claim for compensation as well for the impact of paying the premiums for the mis-sold product.
"DHA have written to the FCA to complain about the delay in the settling of the compensation claims, only to be told that the FCA can't involve itself in individual cases - it seems as though the process allows the Banks to review themselves and no other truly independent party to get involved or provide proper oversight. Nor does the FCA think it appropriate that the Bank should pay the cost of the claimant getting proper professional advice in this matter".
He added: "It is now well over 2 years since the FCA announced its review and the amount of time, effort and work put in by the Board of Trustees and the management team of DHA to achieve a settlement with the Bank has been immense, but more importantly time that they have not spent on supporting the people of Derby and Derbyshire.
"The people at DHA just want and need the Bank to act swiftly from now on so that DHA can get back to helping people who are at risk of being made homeless, which is what they should be spending their time on."
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