The Decline and Fall continued

House of Commons,

9th December 2013

Dear Mr Hoyles,

Thank you for your letter regarding your business’s experience with RBS. I can assure you the Government is aware of the claims around the way businesses have been treated by banks in general and by RBS.

The evidence which has been brought to light in L.T’s independent report, commissioned by the Secretary of State for Business, Innovation and Skills, has been referred to the regulators, the Financial Conduct Authority and the Prudential Regulation Authority, and to RBS.

Some of the allegations are very serious and the Government is now waiting for an urgent response as to what actions have been taken to resolve these.

However, the Government is confident that the new management of RBS is aware of former practices towards small businesses and is determined to turn RBS into a bank that will support the growth of small and medium sized businesses.

Should you wish to complain about RBS’s actions in your case, then – if you have already complained directly to rBS – I would recommend that you contact the Financial Ombudsman.

Yours sincerely,

…….MP.

A further response from the Department for Business Innovation and Skills dated 20th December 2013 indicated the Financial Conduct Authority were appointing a skilled person to review all the allegations against RBS.

COPY OF LETTER TO FINANCIAL OMBUDSMAN SENT BY OUR ‘ADVISOR’ below.

DEAR SIR,

MRS K and Mr G Hoyles’ complaint about the Royal Bank of Scotland Plc

We refer to your letter dated 22nd August 2013 and the extension granted in relation to an appeal. As indicated in my interim email there is a significant number of inaccuracies contained within your response based upon information supplied to you by the bank. We have now had an opportunity to obtain supporting information in relation to the complaint and additional information has come to light. I also think that the circumstances of the bank need to be taken into account throughout this process as the bank went from being an aggressive lender at the start of the process before almost succumbing to insolvency during the course of it. The bank’s appetite to lend was significantly diminished during this period and may explain some of the delays and variations to the offer that caused the problem.

I will seek to raise the points in the order contained within your response.

Circumstances

The Hoyles did not have a £15,000 overdraft, it was £10,000 per the enclosed correspondence. In isolation this may seem relatively trivial but when taken in the context of other information clearly points to the proposition not being accurately presented to the bank credit team. You state that the Hoyles’ had 30 years previous hotel experience from the bank’s files. This is not the case and was never presented as so by the Hoyles’. The Hotel Continental is and was advised to be the Hoyles’ first venture in the Hotel sector.

The second loan was for the acquisition and refurbishment of the adjoining property at 30 Marine Parade. The bank agreed 100% finance per the attached letter date 18th May 2007 with an estimated £50,000 of refurbishment costs. It had been made clear in Mr Hoyles letter dated 7th May 2007 and during discussions that the property was in a poor state of repair. Mr Hoyles had also been clear that his favoured option was to refurbish them as self-contained suites as part of the Hotel. A survey was carried out on behalf of the bank on 29th May 2007 which values the building as a whole comprising 3 partially self-contained flats. although we are not privy to the bank’s instructions at the time of requesting the survey the bank would have been well aware that this was a commercial venture. This is referred to later in the context of the bank’s request for an additional survey.

The valuation does indicate a potential cost of £10,000 although this was addressed to the bank and the Hoyles were not given a copy. The Hoyles quotes, as you point out were of the order of £50,000.

The mortgage was completed in October 2007. On 4th November 2007 Mr Hoyles submitted quotes per the enclosed letter totalling £65,000.

On 3rd December 2007 the bank confirmed that they were willing to lend up to £70,000 subject to 3 conditions, one of which was that necessary planning was obtained. It is highly unusual as a prudent lender to grant 100% finance on a property where the known purpose of acquisition is subject to planning.

On 18th January 2008 the Hoyles received confirmation from their planning consultant that they needed to get a Unilateral Undertaking from the bank in relation to the planning permission. This was requested and despite chasing by the Hoyles and their Solicitors this was not returned by the bank. Please see their solicitor’s letter dated 13th February 2008 confirming the bank’s tardiness in response. Despite gaining an extension to the submission date, the bank failed to respond, and planning was rejected.

Following advice from their solicitor the Hoyles successfully obtained a certificate of lawfulness which enabled them to progress with the refurbishments in August 2008 along the lines the bank had agreed.

On 18th August 2008 Julie Feeley at the bank wrote to the Hoyles and indicated that a residential valuation was carried out initially and that it should have been a commercial valuation. Given that the bank instructed the initial valuation it is impossible for the Hoyles’ to conceive that this was incorrect.

By the time the second valuation was done, again incurring additional expense, the Hoyles’ had started preparing the property for refurbishment and removing items where there was minimal cost in preparation. The survey down valued the property based on its then current state of repair to £160,000. The bank then withdrew the offer to cover the refurbishment costs. This was at the height of RBS problems following their ill-fated rights issue when they were desperately trying to preserve capital.

On 7th November 2008 after various subsequent conversations Y at the bank emailed to confirm that the bank would provide further funds to assist. There was never any confirmation of the sum being made available and certainly not the £30,000 referred to in your letter, and no additional funds were ever made available.

Exit strategy.

Your letter refers to the bank file. Clearly, we do not currently have access to this. Retirement was one of many options that had been mentioned. Had the management of the file been passed to a local office perhaps this could have been more proactively managed. A 280mile journey to their bank would clearly not have allowed the relationship to develop so that the bank could have been more aware of the Hoyles’ options. No discussions took place with regard to the Hoyles’ plans post drawdown of the facility.

Independent advice.

The contentious issue regarding independent advice does not relate to legal advice. I believe this was covered in the original submissions.

Findings.

You summarise by saying that you do not consider every point or query, only those where the customer has suffered material loss or inconvenience.

I agree that the sale and retirement option was a possibility, but it was certainly not the only option, and the bank were aware of that. Clearly certain information noted on the file has been incorrect as already flagged up. There is clearly some clarity lacking around the introductory source and the credibility of the Business Development Manager, MR. We have already submitted MR’s public profile on Linked In which confirms that he was running his own finance consultancy business at the time of these loans. It transpires that MR was also the Director of a property company at the time, D Homes Ltd. Your reply states that the bank did not pay any introductory fees but that the proposal did come from a broker which has subsequently closed. I am unaware of any financial brokerage that does not seek remuneration for their time and efforts and thus I am unclear why a Business Development Manager working for the bank whilst seemingly working for two related businesses would be dealing with this introducer. To the untrained eye this certainly looks spurious when facts have been misrepresented in the customer file. It is highly unusual for a bank employee to obtain approval to run his own property company and brokerage whilst still employed.

You refer to the replacement borrowing on credit cards was not intended to be long term. That certainly supports my view that the second loan should have been on a variable rate to allow for simple capital reductions.

You say that I am concerned that the matter was not referred to the banks treasury department as a result of the level of borrowing. The bank employs policies specifically to ensure that their customers should get best advice. The policy of referring to treasury certain size loans, such as the Hoyles had become, would have afforded the Hoyles the option of considering the best approach. You say that the loan documentation makes such a recommendation. I cannot see anywhere that it recommends taking independent financial advice.

You refer to the Hoyles 30years experience when this is in fact their first venture in the hotel trade when they acquire it in the 90’s.

You refer to the market view on interest rates. I have spent many years in banking, including 13 years at RBS. It is impossible for you or I to conclusively say what recommendation we would have made at the time. What we can say with absolute certainty is that they were not afforded the choice, and, in that context, they were ill advised and in contravention of bank policy at that time.

You say finally that the Hoyles were not disadvantaged by the fact that they were banking 280 miles away from their branch. I would contend that the bank purports to be a relationship bank and were in breach of their own sanctioning of the facility. The bank has distance banking rules for a reason. It is impossible to build the level of trust required in a sustainable long term banking relationship from 280 miles away. They would not have been in a position to closely manage the potential exit strategy from that distance.

Of course, the Ombudsman worked for the same firm as the Bank, RBS having been bailed out by the Government, rescued from bankruptcy in 2008. So realistically what chance did we have? They were all pissing in the same pot. Perhaps a body to watch the Ombudsman would be a good idea. An Ombudsman of Ombudsmen and right on and on forever and ever Amen. Lovely.

30th May 2014

Email from our financial advisor.

Dear Gordon & Blossom,

Numbers as suggested by D. This is an outline but gives you a flavour of thoughts and I think looks sensible.

Buy from bank for £600k + stamp duty and legals it would be, say £640k

Bank need to confirm no issues with brewery supplier or other creditor.

Let dust settle after bankruptcy. Market house for £525k, get say £500k.

You run it for agreed wages.

In the future, once bankruptcy discharged, we seek a going concern sale.

Sale structure

Investor gets first £100k surplus and then 20% of everything above.

eg.

House sold and Hotel left owing £200k.

Residue for sales bonus for Hoyles in future as incentive

Sale price £300k = £100k v 0k

£400k = £120k v £80k

£500k = £140k v £160k

£600k = £160k v £240k

£700k = £180k v £320k

£800k = £200k v £400k

£900k = £220k v £480k

The higher the future the sale price the better the incentive payment.

I would stress that this is a suggestion and not a recommendation. You must choose whatever option you believe gives you the best chance of a favourable outcome.

Best regards,

22nd April 2016

Email to our legal representative commenting on the email above.

“ I believe this email sent in May 2014 is clearly an embryonic conspiracy to defraud which we were not a party to. For a long time, all through his attempt to get a ruling from the ombudsman against the bank and beyond, this man, our ‘financial advisor’ told us not to put the hotel on the market because the value would rule out any chance of a deal being made with either the insolvency practitioners or the bank. He was trying to demonstrate that it was worth far less than a true market value. It cost us valuable time. As he liaised with the insolvency practitioners on our behalf, I believe they were unaware it wasn’t being properly marketed.

___________________

Further letter to our legal team.

I’m truly sorry for my totally unnecessary “disappointed” comment in my last letter.

I am sure you will understand we are fending off panic. Please note we are extremely grateful for your continuing services.

Can you tell me please, is our future “inevitable bankruptcy” as claimed by ….Law or have we a chance of being allowed a decent exit through our decent efforts to solution?

At risk of seeming to ramble on I would like to expand on our position to comments made in …..Law’s letter of 7th April. For instance, “seeking to sell” “for many years”. Whilst the business has been on the market in the past without success and we did attempt a prize draw solution to bring in the funds , unsuccessfully, the involvement of the Hotel Inspector and her introduced genuine and quality selling agent Mr P, which though they haven’t had the instruction for very long has resulted in two viewings and one offer so far which the agent recommended we did not accept suggesting a better price can be achieved.

“Inflated and unrealistic valuation” “and that is a view supported by your client’s own financial advisor”. With reference to our financial advisor, I think it’s important to offer some notes on the character of the help brought by those connecting with our problem.

It turned out that our financial advisor, who said often enough wasn’t giving advice was introduced to us by the insolvency practitioners and administrators of our IVA’s, was and probably still is part of a property company, suggested to us on many occasions that we sell to his friend and partner, a chap called D at a knock down price. That we would then go bankrupt and on being discharged after a year would receive a pay-off which would be calculated on a sliding scale basis according to how much profit they made. We have in our possession a table supplied by the advisor of possible payments we would receive on prices achieved should we accept the deal. In view of which he would devalue the properties wouldn’t he.

That the IVA practitioners knew of his thinking makes us wonder about their motives.

Our new accountant, recommended by our advisor, was I think connected with this deal offer. On reflection the whole set up we fell into stinks.

“based on continual failure to address any of their obligations.”

This looks very bad. However, it must be understood is largely due to a general breath-taking decline in business activity in the Harwich area. A decline accelerated by the withdrawal of North Sea windfarm activity to Yarmouth and Lowestoft and the cruise ship activity declining from 50 to 60 vessels a year to less than 10 this year. It is expected to return to normal in 2017.

Reacting to this decline the business community is working together on rebranding the locality to develop tourism which must benefit our business. We feel we should be given time to allow this new initiative to take hold.

I believe we have been totally misled by the IVA people and the financial advisor and should have been advised to take legal advice long before your involvement.

“that your clients are nowhere near achieving a sale”

I want you to be aware that earlier this year we sold two of the flats at No.30 Marine Parade for the full asking prices; one for £120k and the other for £110k. Unfortunately, the £120k fell through because the purchaser would not wait for all the legal work of separate deeds being drawn up claiming the delay would cost him several thousand pounds to the tax man.

And the £110k was a young army person who was posted elsewhere and so decided against the purchase. We have a prospective client coming today, Sunday 17th April sent by our local agent.

So actually, there is interest a plenty and we may near achieving sales and a satisfactory end all round.

Hoping this input will help our case,

Best wishes,

Gordon and Kathryn Hoyles

In response to a bankruptcy petition we received, we made a late plea to our legal team.

4th August 2016.

Believing it is possible to challenge and overcome the philosophy of simple arithmetic being used against us at the moment I would like you to consider this short list of positive developments which may benefit our future.

1. The graph attached shows dramatic and undeniable improvements in the performance of our business. We believe this momentum will carry us forward into a more prosperous future for the Harwich area many independent enterprises are forecasting and striving to bring about. This increased income could allow us shortly to reduce our debt to HMRC i.e. the VAT bill. We may even be able to catch up the backlog.

1a The Mayflower Project

1b Developments at the Port which we are told are imminent and to do with windfarm activity.

2. We are receiving independent, professional help to obtain grant support to grow the art aspect of our hotel which we have always hitherto been alone with. To this end we are establishing a new body, The Friends of the Hotel Continental which is already receiving free publicity from two radio stations. This important effort is aimed at maintaining the high occupancy figures we are currently enjoying, 80,90 and 100 percent’s. We will be using social media and all forms of communication at our disposal as promotional tools.

3. Without really trying and without really noticing we have become a community centre for local groups and organisations. The local Bridge Club are using our facilities every week as their venue to meet and play and have adopted us as their unofficial headquarters. The local Mae Jong society are likewise having weekly meetings here. And the Harwich Arts Festival are using the Hotel for committee meetings. We also host meetings of the Beach Hut groups. We are also the centre for 2 groups of Writers’ seminars meeting again once a week. One run by a publisher and the other by a novelist.

4. We also have ongoing a programme of art exhibitions with works for sale.

It would be a great shame to dislocate all this community activity that has come to our aid.

It’s just a hope that some of this goodwill may gain us enough time to either find the funds to pay off creditors or sell at a realistic price.

Best wishes,

Gordon and Kathryn Hoyles

Blossom cried. A little cry which she stopped immediately I asked her to retrieve some dignity. We had a short interview with our counsel who advised against appeal.

The whole event took place in a little room. The judge, our barrister, a barrister and clerk for the petitioner and Blossom and I were the only ones’ present. It had a sordid feel. An ignominy. A star chambers’ secure secrecy and power. Power to extinguish our spirits. Kill our purpose. To snuff out or let live. They chose to snuff out with just a phantom Pontius Pilate handwashing to exonerate from responsibility for the crushing. Delivered with platitudes, “it’s a very difficult decision” and so on. To give her comfort and us a couple of seconds of hope.

They were out of control.

Holding hands, we walked away from the cesspit and the stench of injustice. Pondering the claimed “hard decision to make” and sadly emptied. Asking each other, what happens now? We didn’t know what to expect, we were left to guess. What would they do to us next? Failing to come up with an alternative we went back to the hotel and carried on as though nothing had happened.

It was about two weeks later that I answered the phone to the Official Receiver to be told they were going to visit us at 9am next day. I said, “we are very busy. Can you come at 2 o’clock when residents breakfast is over, and a booked lunch function will be just about finished?”

“No”, he said, “this is urgent.”

“See you at 9 o’clock then.” I said.

Blossom and I decided that all the staff should be present to learn why they were about to lose their jobs.

The expected in the shape of three people turned up at 9am, a woman fashionably presented introducing herself as the Official Receiver, and two men, a large one and a smaller dapper older one.

They were cordially welcomed and organised themselves, joining tables together to form a desk in the dining room. They faced the door, and two chairs were placed before them for Blossom and I. They were a little non-plussed when we entered followed by half a dozen others.

“What’s this?” the smaller one asked.

“Our staff,” I said. “As they’re affected, we decided they’d better hear what’s going on first-hand instead of us explaining later. They may have questions for you as well anyway.”

“It’s a bit unusual, but if you’re happy with that?”

We answered a few easy questions; the big one wanted to see a Picasso; the fashionable presentation said we could live in our flat, the Garret in No.30 for a year, and required we supply to her all-financial records. With handshakes they left after instructing we must not remove anything from the properties. It wasn’t a long meeting and friendly.

It was later that day about 5 o’clock we were told by phone we must cease trading immediately, close down.

At a stroke our golden coach reverted to a pumpkin.

So, we drew the curtains and carried on serving by appointment only and honoured any room reservations.

RBS the bank brought in accountants & insolvency practitioners who introduced Z our advisor/suggester who early recommended bankruptcy and brought Dougie, Property Company to negotiate and eventually to court and bankruptcy. Neat and tidy. A crazy game of pass the parcel with musical chairs. And when the music stopped no place for us.

Blossom and I turned up for work every day hitherto addressing ourselves to the paperwork imposed by the official receiver. We did this for a month sitting in the dining room on full view from Marine Parade. We entertained a few passers-by, friends and well-wishers with tea and cakes. Before the job was finished, there was a lot of it, twenty years-worth, we were advised the official receiver had handed the case to BNP Paribas, the receiver appointed by the Bank.

This brought a new approach, a mode humane. We were allowed to take whatever we wanted from the properties, but this came with the drawback that we were not secure in our flat for the promised year. However, this trade-off was to our liking.

At the end, the final acts “I will help you” they said when we told them the receiver had given us permission to take away anything we wanted. This was after the locks had been changed on the premises. We would be allowed access for one hour every Thursday when the receiver’s security personnel visited for routine checks. With such a limited time available to us we gladly accepted the help. We expected to be in control of an orderly, reasoned, prioritised efficiency retrieving our things. What we got was a marauding horde, rough families, women, children, some people we didn’t know brought by those we did know tearing the place apart. Swarming savages wrenching things off walls, breaking things in their eager haste.

I didn’t realise what we’d accumulated was so desirable. That those people coming into our establishment, some of them every day were lusting after our possessions, secretly, silently choosing, desperately waiting to be first in at the death, vulturing, picking, tearing, frenzied.

How fickle the knitting. How easily order can become chaos.

The theory offered and there always is a theory and often, in fact mostly the theory gets more esteem than the action revulsion. The theory in this case was, since you are bankrupt the stuff doesn’t belong to you anyway anymore. But, if I say to someone you can have that, whatever it is, then from then on it belongs to them therefore that we were given permission meant that the helpers were in fact stealing off us. Treating us with absolute contempt.

After we’d long gone the theme continued. Reported in the Harwich local paper 26th January 2018 this vandalism continued with squatters, youths and burglars taking advantage. Five recorded incidents of wreckers at work.

The whole edifice standing now has turned into the monumental expression of the wrongs done to us.

Like the dodo, extinct but not forgotten.