Thousands of investors have launched a £3.5bn compensation claim against the 82 per cent state owned Royal Bank of Scotland. We answer five questions on the claims.
What are this group of investors seeking compensation for?
The group are raising the claim against the bank as they believe the bank deliberately misled them into believing it was in good financial shape just before it collapsed in 2008.
After collapsing the bank was then bailed out by the government.
How many investors are involved in the suit against the bank?
12,000 private shareholders and 100 institutional investors.
These include 20 charities, churches, pension funds, hedge funds, fund managers and private client brokers, who collectively manage £200bn.
Are any individual bank members also being sued?
Yes, former chairman Sir Tom McKillop is also being sued, as well as Johnny Cameron and Guy Whittaker, who were also senior members of the bank at the time.
Former Chief Executive Fred Goodwin is also being sued by the group.
What have the investors said?
In a statement the group said:
“The action group maintains that the bank’s directors sought to mislead shareholders by misrepresenting the underlying strength of the bank and omitting critical information from the 2008 rights issue prospectus.
“This means that RBS will be liable for the losses incurred on shares…”
A spokesman for the investors told the BBC: “Today represents a giant step forward for the many thousands of ordinary people who lost money as the result of inexcusable actions taken by banks and their directors in the financial crisis.
“Now, for the first time, some of these directors will have to answer for their actions in a British court.”
What happens next?
The Royal Bank of Scotland has 30 days to respond to the class action which has been raised with the High Court of Justice’s Chancery Division in London.
The group have estimated they could receive as much as £4bn from the claim.
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