Lawrence Tomlinson - Biography

Lawrence Tomlinson has grown an impressive business portfolio from a single care home in 1988 to the award winning LNT Group which employs over 2000 people across its five diverse core businesses; Ideal Care Homes, LNT Construction, LNT Software, LNT Solutions and Ginetta. Lawrence’s business acumen and foresight has ensured the LNT Group remains one of the fastest growing companies in the UK. more

Press Release - 08/11/2016

Tomlinson Report Author Reacts to RBS’ Decision to Compensate Businesses

Lawrence Tomlinson, author of the Tomlinson Report, first exposed the unfair treatment of businesses in the Royal Bank of Scotland’s (“RBS”) turnaround division Global Restructuring Group (“GRG”) in his report on 25th November 2013. RBS has today announced their admission that they did not treat customers fairly and will be setting up a complaints process and compensation scheme for fees charged in the unit.

Reacting to the summary of findings also announced by the Financial Conduct Authority, Lawrence Tomlinson has provided a full formal statement:

“At last we are seeing some admission from RBS that they did not treat customers fairly in their turnaround division Global Restructuring Group. As I said to Ross McEwan at the time of publication, all my report summarised was the experiences of its own customers, what they were saying about the bank’s behaviour and when brought together, what this looked like to the outside world. It has taken the bank three years to admit that the core elements of those findings were correct.

The FCA has stated in its findings that parts of this inappropriate treatment could be considered “systematic”, resulting from a failure to “recognise and manage the conflicts of interest inherent in GRG’s commercial and turnaround objectives”. The twin objectives of GRG, as stated, are clearly incompatible without serious risk to customers or rigorous oversight and governance. The FCA conclude that RBS did not safeguard its customers from inappropriate treatment in favour of the bank through its poor governance and lacking oversight.

In summary, the FCA found: fees were unfair; SMEs were not supported in line with good turnaround practice; customers received misleading communications; there was a significant conflict of interest in West Register; and valuations were not undertaken correctly.

Most importantly, the FCA found widespread evidence of “placing an undue focus on pricing increases and debt reduction without due consideration to the longer-term viability of customers.” This makes it clear that the bank put profit ahead of the viability of businesses. Coupled with the confirmation from the FCA that businesses were misled by the poor communication on transferral into GRG, one rightfully questions whether the purpose of GRG as a turnaround division was completely lost by the bank in its practices and whether this led to misrepresentation to businesses.

I’m pleased that RBS has established a new complaints process and put a compensation scheme in motion for fees, but this is the most easily quantifiable part of the FCA’s findings. The FCA found the conflicts of interest in West Register were not handled and RBS’ “upsides” were not safeguarded to ensure they were appropriate. Whilst they say that West Register alone did not give rise to financial loss, taken with the impact of increased fees and lack of safeguards, the FCA will have to give further consideration as to the impact on businesses’ viability and subsequent administration as a result and whether the bank inappropriately benefitted as a result. Today’s announcement is an important first step but it appears there are more conclusions needed on these most damning elements on the banks behaviour.”

Press Release - 10/10/2016

Author of Tomlinson Report Declares RBS Files ‘Evidence’ of GRG Allegations

An investigation by BuzzFeed News and BBC Newsnight, released today, has brought to light thousands of previously unseen internal documents, which add further pressure to the Royal Bank of Scotland over allegations about their turnaround division, Global Restructuring Group (“GRG”). The unit of the bank has been under investigation by the Financial Conduct Authority since the publication of the Tomlinson Report in 2013, authored by the Government’s Entrepreneur in Residence at the time, Lawrence Tomlinson.

Responding to today’s revelations and having reviewed a selection of the RBS Files, Lawrence Tomlinson has declared them ‘evidence’ of the allegations made in the Tomlinson Report.

Lawrence has released the following formal statement on the RBS Files:

“The RBS Files show the Royal Bank of Scotland, and its Executives, took the opportunity to make profit from businesses in distress whilst telling them that they were there to ‘help’. The Files show the excessiveness of fees and interest charged in GRG and unequivocally demonstrate the ‘value-added’ to the bank’s balance sheet through GRG’s work on risk-weighted assets. As a result, GRG has damaged thousands of viable businesses in the pursuit of profit for the bank.

Three years ago, I called for an investigation into the behaviour of GRG. Since then, we have been waiting for the results of the Financial Conduct Authority’s (FCA) review of this unit of the bank.

Today’s report from BuzzFeed News and BBC Newsnight on the RBS Files demonstrates that the perverse incentives I described in the Tomlinson Report did exist within GRG. There are unmistakable conflicts of interest between West Register and GRG.

Most vitally, despite the protestations of the bank and statements of GRG’s Executive Team at the time, Derek Sach and Chris Sullivan, this division of the bank was not only a profit centre, it made over £1.2bn of profit from interest and fees in 2011. That is before accounting for the billions of pounds of ‘value-added’ to the balance sheet they boast of.

There are many questions for the bank and regulator to answer:

• Why has RBS so vehemently denied the allegations of the Tomlinson Report when the bank was in possession of the evidence at the time?
• Why were RBS’ ‘independent’ reviewers, Clifford Chance, not given access to these documents ahead of the publication of their report?
• Were the FCA in possession of this information and if so, why has it taken so long for the FCA report to be published?

I trust the bank will now be retracting the statements it made about the Tomlinson Report. It is a national disgrace that UK taxpayers, as majority shareholders in RBS, have been picking up the legal bill for all these reviews and investigations, when the bank could simply have held up its hands and put things right. RBS’ Chris Sullivan even went so far as to cancel my NatWest business and Coutts personal bank accounts the evening before he made misleading statements to the Treasury Select Committee in defence of GRG, despite knowing the contrary to be true.

For me, the biggest part of the scandal is what RBS told the businesses about the purpose of GRG, compared to what actually would happen to them in that unit of the bank – the lack of transparency is astounding. This has all been enabled by a system pervaded by conflicts of interest of so called ‘independent’ parties. The purported neutrality of professional services utilised by GRG to provide ‘impartial’ verification of their decisions is called into doubt by the fact that almost 10% of the workforce in GRG was made up of secondees from these firms. Not to mention the role of West Register within GRG.

All businesses affected by GRG deserve an immediate apology from the bank whilst the FCA considers how a compensation scheme should be structured. The FCA should also consider how this behaviour was enabled by the conflicts of interest in the professional services industry.”

Press Release - 23/07/2015

RBS hires advisers to look at treatment of small businesses

Lawrence Tomlinson, author of the Tomlinson Report, responds to the news:

“I’ve always been supportive of Ross. He’s had a tough journey, taking the post of CEO at a difficult time for the bank, faced with a hornet’s nest of legacy issues to deal with. It’s clear from his comments, and actions, over the past 18 months that he takes the potential mistreatment of businesses by RBS very seriously. He has already taken steps to close West Register (RBS’ property division) and Global Restructuring Group, as well as the early departures from the bank of senior executives involved. Whilst I have not seen the remit of the advisors’ scope, I am pleased to see Ross taking such a proactive approach. I hope this leads to a positive outcome for the businesses involved as well as starting to rebuild the bank’s reputation with SME’s after so many terrible scandals.”

Press Release - 05/05/2015

Lawrence Tomlinson Responds to The Times’ Evidence on GRG

The Times has today reported new evidence which provides further backing to the allegations made in the Tomlinson Report. The Times reports that documentation and whistle-blower evidence has come to light which shows a concerted effort by RBS to utilise their Global Restructuring Group (“GRG”), to “reduce exposure to businesses that had badly affected its capital position” which led to “stripping assets of struggling firms”.

The findings suggest that, in 2011, GRG personnel were trained to specifically assess the impact of SMEs on the bank’s capital ratio, which led to the financial pressures and foreclosures reported in Lawrence Tomlinson’s report.

Commenting on The Times’ report, Lawrence Tomlinson said:

“These findings are in line with the information received in the compilation of the Tomlinson Report which demonstrated that the RBS non-core strategy included perfectly operable SME businesses. The evidence, uncovered by The Times, seems to confirm that GRG was the tool RBS used to implement their strategy of reducing non-core assets.

It looks as if many businesses have been the unwitting victims of RBS’s desire to strengthen its balance sheet. This is another example of the interests of the bank and those of its customers being two very different things.”

Considering at the current political context, Tomlinson adds:

“There can be no clearer evidence that the Government-backed banks are too big and require decisive political action to prevent the continuation of the banking scandals of the last seven years. I’m delighted that this has come to light so close to the General Election giving whichever Party, or Parties, who form the new Government impetus for change. Splitting up the banking oligopoly by breaking up RBS and Lloyds is the only tenable way of refocusing the banks on their customers’ needs, injecting competition back into the market. The onward impact will be felt across the UK economy, supporting the industries which are the powerhouse for growth and exports.

Whilst it is now too late for the parties to include measures into their manifestos, once the Government has formed there should be a drive to implement policy which will secures more banking competition. I will be very willing to work with the new Government to assist them to create a banking market place which works in the favour of businesses across the UK.”

Press Release - 10/03/2015

Lawrence Tomlinson Responds to Treasury Select Committee Report

Following the publication of the Treasury Select Committee report, “Conduct and Competition in SME Lending”, Lawrence Tomlinson has released the following statement in relation to two key aspects of the report; the conduct of the Royal Bank of Scotland’s Global Restructuring Group (GRG) and competition in the banking sector.

In regards to the allegations surrounding GRG, Lawrence stated:

“The Committee is rightly critical of the narrow brief and lack of independence of the Clifford Chance report into the allegations about the Royal Bank of Scotland’s GRG. The misleading evidence provided by the two senior executives of the bank, Chris Sullivan and Derek Sach, is testament to the culture that appears to prevail in the Royal Bank of Scotland. Whilst I hope the Financial Conduct Authority’s report into GRG will be more far reaching and independent, it must not be forgotten that the Clifford Chance report included some extremely concerning findings, especially in relation to the lack of transparency of fees and failure to use the RICS red book when undertaking valuations. I entirely agree with the suggestion posed by the committee that an un-transparent fee is inherently an unfair fee. This should be considered in the FCA report given the negative impact these fees have had on businesses in GRG.”

Lawrence has frequently recommended the break-up of the Government-backed banks as a solution to the frequent scandals and mis-selling claims that result from the cultural attitude towards customers in the banking sector. He added:

“I’m delighted that the Treasury Select Committee has taken such a firm stance on competition in the banking market place. I strongly endorse their recommendation to the Competition Markets Authority to consider the essential need for structural reform to reduce market concentration. Through the publication of the Tomlinson Report, I hoped to highlight the type of behaviour that has been allowed to permeate the bank/business relationship without recourse due to the lack of competition for SME lending. Poor customer treatment has continued as borrowers have nowhere else to turn given the oligopoly of the big banks. As the Chancellor has recognised, bank behaviour is a core concern of the electorate. It is not too late to take decisive action and I urge all political parties to give this full consideration when drafting their manifestos. It is a long term solution which will generate a greater return to the Treasury than the immediate sale of the Government-backed banks.”

Press Release - 24/11/2014

Lawrence Tomlinson responds to RBS/Treasury Select Committee exchange on ‘inaccurate’ evidence.

" It’s extremely disappointing that once again RBS has not taken an open and honest approach to dealing with very serious allegations. The misleading nature of the evidence provided by RBS executives Derek Sach and Chris Sullivan makes a mockery of both the Parliamentary process and of the SMEs who have suffered as a result of the banks’ actions. Once again, we are left to question whether this is incompetence on behalf of the bank or intentional distortion of the facts. Either way, when we have paid such a high price to save the bank, and to remunerate the highest quality staff, it is beyond unacceptable that this behaviour should continue. Mr Sullivan even reportedly received a £470,000 bonus shortly after his appearance in front of the Committee"

The bank is still too big to fail and in turn, too big to control – it’s time for decisive action to create smaller, more manageable banks who have to compete for clients to stop the perverse incentives that have prevailed amongst the biggest banks.

Press Release - 06/11/2014

Lawrence Tomlinson Comments on the CMA MIR on SME Banking

“I’m extremely pleased with today’s decision from the Competition Market Authority to issue a Market Investigation Reference into SME banking which has received widespread support.

I have long been a proponent of increasing competition in the banking market place as decisive action is needed to rectify the David and Goliath nature of the business/bank relationship, addressing the negative culture that has developed in these institutions. It’s time to get banks serving business again - not the other way round! This can only be achieved through the break-up of the banking oligopoly between Lloyds and RBS into six smaller, more manageable, accountable and competitive banks beyond the small divestments already planned.

Whilst we have seen an upturn in the economy, the real economy is still not showing the growth we need for long term sustainable growth with exports continuing to struggle. Access to finance and fair banking arrangementsis necessary to enable SMEs, the engine behind our economic success, to flourish.

I very much look forward to seeing the CMA’s findings when they report on their MIR.”

Press Release - 25/11/2013

Lawrence Tomlinson is today publishing the findings of his report on banks’ treatment of businesses. Lawrence’s report focuses on the large body of evidence he has received about RBS’ turnaround division, Global Restructuring Group (GRG).  He has uncovered very concerning patterns of behaviour leading to the destruction of good and viable UK businesses.     Lawrence, who is the Entrepreneur in Residence at the Department for Business, Innovation and Skills, is calling for further investigation into this behaviour by the appropriate authorities and immediate action to stop this unscrupulous treatment of businesses.

The findings of Lawrence’s report suggest that there are occasions in which RBS is engineering a business into default in order to move the business out of local management and into their turnaround division, GRG.  This then generates revenue for the bank through fees, increased margins and the purchase of devalued assets by their property division, West Register.  Once in GRG, Lawrence asserts that the business is trapped with no ability to move or opportunity to trade out of the position.  Commenting on the publication, Lawrence said:

“The profit-making nature of GRG significantly undermines its position as a turnaround division, in which good businesses should be restructured and returned to normal banking.  The temptation to get hold of assets and take additional profit from these businesses to boost GRG’s balance sheet is clear.

From the cases I have heard, it is clear that a perception has arisen that the intention is to purposefully distress businesses to put them in GRG and subsequently take their assets for the West Register at a discounted price.  This needs to be addressed and the conflict of interest removed. 

Now RBS is aware of this behaviour through my work, the work of Sir Andrew Large and the investigation by the Sunday Times, it’s time for them to look carefully at the processes and actions of this part of the bank.  There are many devastating stories of how RBS has wrecked good businesses and the ruinous impact this has on the lives of the business owners.   I look forward to seeing how RBS proposes to take forward the forensic investigation into this part of the bank.”

Lawrence’s recommendations call for more competition to remove incentives to make short-term decisions purely in favour of bank profit rather than in the interest of the longer term customer relationship.  He states that:

“Without competition in the banking sector, these scandals will continue to come to light and ever more business will be hurt in the process.  With RBS and Lloyds at the size they are at, smaller challenger banks will never be able to adequately compete to take their customers and drive true market forces.   It is vital that RBS and Lloyds are made significantly smaller, removing conflicts of interest within the bank, and creating a number of smaller, purely retail/commercial banks.”


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