By Kirstin Ridley
LONDON (Reuters) – Almost 150 claimants have filed a lawsuit against Britain’s Clydesdale Bank and former owner National Australia Bank in London, alleging thousands of business loans were mis-sold in a potential multimillion pound claim.
RGL Management, a claims management company that represents small or medium-sized (SME) businesses, said on Thursday it expected to add hundreds more claimants to the case in a group claim that could swell to at least 700 by the end of the year.
“Clydesdale’s conduct towards its customers has been utterly disgraceful,” said James Hayward, the CEO of RGL Management.
“We are pleased to be launching this action today to recover the hundreds of millions of pounds in losses owed to claimants. We are resourced to prosecute this matter to a successful outcome for the claimants.“
A spokeswoman for Clydesdale said the bank had yet to receive details of the case. In the meantime, the bank said it continued to strongly refute any suggestion that it had not fully investigated historic cases involving SME customers in a “wide-ranging remediation programme”.
National Australia Bank (NAB) was not immediately available for comment.
The action, filed after British politicians have lambasted lenders for predatory practices against small businesses, relates to around 8,300 Tailored Business Loans (TBLs) that Clydesdale issued between 2001 and 2012.
RGL is alleging a string of offences against the banks, including deceit, misrepresentation, negligent misstatement, breach of contract and unjust enrichment.
It alleges Clydesdale deliberately or recklessly misrepresented a contractual ability by the banks to charge a break cost to end the loan early – to which they were not entitled – and deliberately added hidden margins into interest charges on fixed-rate loans.
The case, which could also be brought in Scottish courts, is being litigated in London by law firm Michelmores, is funded by Augusta Ventures and has after-the-event insurance in place to cover any legal costs that might be incurred, RGL said.
Banks in Britain have already paid out more than £2 billion in compensation to small companies that claim they were mis-sold interest rate hedging products.
Around 6,000 Clydesdale customers were sold TBLs, with embedded interest rate hedging features, which are not eligible for compensation because they are classified as commercial lending.
In a parliamentary report published in 2015, lawmakers said Clydesdale had admitted the terms and conditions letters for TBLs were not as clear as they could have been.
(Reporting by Kirstin Ridley; Editing by Mark Potter)