August 1 2014 Latest news:
By John Elworthy , The Editor
Saturday, February 9, 2013
A CALL to his Cyprus holiday home and talk of a million pound black hole heralded an economic tsunami that saw Peter Grice’s multi million pound packaging company teeter and collapse.
He didn’t realise it at the time but the Fenland entrepreneur had become victim to a byzantine scam dreamed up by banks over which he was powerless to stop.
At its simplest the £7,000 a month he was obliged to pay the Royal Bank of Scotland was there to protect interest rates rising on a £1.2million expansion loan.
But in late 2008 – six months after agreeing the loan during which time he paid the monthly fee- the Royal Bank of Scotland pulled the plug on the loan.
And to compound the catastrophic nature of their mis-selling Mr Grice found he was powerless to renege on the £7,000 a month fee which he was legally forced to pay and which, very shortly, left his business in ruins.
“My lawyer told me I had to pay,” he said. “Every time I mentioned it to the bank they didn’t want to know.”
Within months cash flow dried, creditors piled in, the business he had grown and nurtured fell victim to receivers as he cashed in part of his pension fund, sold assets and worked relentlessly to remain solvent.
“The bankers even sent advisers in at one stage to go through the books,” he said. “They charged £25,000 for that and did little.”
They also loaned him £130,000 for an eight week period – charging him an eye watering £50,000 interest.
Mr Grice was faced with interest payments totalling £20,000 on various swaps and collar loans- including the £7,000 interest on a loan he had never received.
His bid to stay afloat was all to no avail for although the bank’s own finances were also in freefall they continued to hold the whip hand- that was until last Thursday.
Years of campaigning by Mr Grice and others finally led to the Financial Services Authority ruling that those wrongly sold these swaps and collars must be compensated.
“It was an extraordinary moment hearing that,” he said. “But I always believed justice had to come sometime.”
For the man who started his business with £1,000 in 1988 with one van and grew a £12 million packaging and soft fruits business based mainly at Coates near Whittlesey the announcement tasted every bit as sweet as any strawberry from his cold stores.
Banks – including the Royal Bank of Scotland, Barclays, HSBC and Lloyds- originally set aside £700 million for compensation but that quickly rose to £2 billion.
Throughout the four and a half years he has fought to retain aspects of his business empire (he still owns some freeholds, has used his pension fund to buy or attempt to buy back other commercial interests) Mr Grice has operated from spartan surroundings.
New companies control the cold stores and packaging warehouses sprawled across 52,000 square feet of his eight acre Kingsland Farm: he operates mainly as a freelance broker and doing deals from a mobile phone and in an office where the switchboard is eerily quiet.
“I keep coming to work but there’s nobody around here,” he said. “The phone stopped ringing; it’s weird for someone who has been busy all my life.”
On a walk round his farm later we go into two floors of an 4,000 square feet office block set up to run PG Packaging and its associated companies and opened 18 months before the receivers got there.
He still has the keys, still recalls the buzz of the sales and marketing departments, and posed behind the desk of the office he vacated but hopes one day, sooner rather than later, will be his once more.
“What they took from me was a perfectly good, healthy business,” he recalls. The coming months will begun the process of analyzing the bank’s actions and the scale of compensation.
THE Financial Services Authority announced it had found “serious failings” in the ways that Barclays, HSBC, Lloyds and RBS had sold interest rate hedging products (IRHPs) or ‘swaps’.
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More than 90 per cent of 173 sales made to ‘non-sophisticated’ customers, such as individuals or small businesses, did not comply with at least one or more regulatory requirement, it said.
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Compensation is likely, says the FSA, in a “significant proportion” of those 173 cases.
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Eligible customers would be contacted automatically by their banks, the FSA says.
“The real truth is that the Royal Bank of Scotland knew they were going down the pan,” he said. “All the people I was dealing with were moved to one side. I was the totally and utterly innocent victim in all of this.”
For Mr Grice the re-building of his life and his business may soon be able to begin. His staff scattered, and even his son Jason, who worked for the family firm, was forced to up and leave, eventually settling in China where he teaches English.
“He emigrated to China last year,” he said. “I think what happened to the business was one of the reasons he left- he’d worked here since leaving school.”
Mr Grice, now 56, seems sanguine and realistic about the future but throughout the wilderness years never lost the belief that one day the world would know the truth of what happened.
“I can’t be angry because I have no one to be angry at,” he says. “It was a system operating at the time- and it sucked me and many others in.”
He kept busy, met MPs to lobby with other victims to get compensation, and at one meeting outlined the mis selling scandal to a group that included Labour Leader Ed Miliband.
Mr Grice said: “I couldn’t really tell anyone much about what was happening. I was advised not. I couldn’t even tell my staff. All the while I was desperately trying to hold it together.”
He added: “I have met many others who were victims too of this mis selling. Many lost their homes and in some instances lost the homes, too, of their parents who had allowed security on loans.
“All I want now is for the bank to put right what they have put wrong.”
Over the years and among the myriad of stories told him is one of a bank employee who reputedly earned £39,000 commission for his part in the mis selling scandal.
He’s not expecting the institution he calls throughout our interview ‘The Robbing Bank of Scotland’ to confess to that or much else.
He’d also like answers to questions he put to RSB chairman Stephen Hester two years ago.
“He didn’t even have the courtesy to reply,” said Mr Grice but that will soon change.
Under the FSA ruling all banks have to contact all potential victims- a letter he awaits with considerable interest.