Businessman forced to sell hotels amid claims Clydesdale’s scheme cost him over £1 million
The National, 19.07.2017
A SECOND Scottish businessman has claimed that the Clydesdale Bank has ruined his pension and his life through “sheer and utter greed”.
Stewart Dykes, who owns the Crusoe Hotel at Lower Largo, Fife, broke his silence after fellow hotelier Jim McGrory told how he had lost almost £1 million trying to “break” a tailored business loan (TBL) from the bank.
Both are among tens of thousands of small businesses – SMEs – who did not realise the TBLs included an embedded breakage fee, which could total up to 40 per cent of the loan. They have also joined an action against Clydesdale being planned by litigators RGL Management.
The Financial Ombudsman has ruled that Clydesdale mis-sold the loans and the bank said it was working through this “long-standing historical matter” with customers “as part of a wide-ranging remediation programme”.
Dykes, 60, had been with the bank for several years and had various loans split between fixed and variable rates. However, he said their hitherto good relationship took a turn for the worse ten years ago.
“My business manager phoned me and said he wanted to have a chat about the best way to structure the business, because he believed the interest rates had bottomed out and the only way they were going to go was up,” he said.
The manager and his colleagues advised him that to protect the business he should break his existing borrowings and consolidate them into a fixed loan.
“In 2007, your bank manager was like your solicitor or doctor – you trusted them,” said Dykes. “I trusted the manager and I broke the variable loans.
“The next thing was the banking crisis happened and interest rates went sky high. I was paying about 8.5 per cent interest and £15,000 a month to the bank.
“They halved our overdraft and we were having problems with cash flow, so they turned around and said they didn’t understand why we were having problems with repayments.”
The bank had a forensic accountant examine his books – at his expense – to make sure he was running the business properly. He paid £10,000 for the accountants, only to be told: “‘Your overdraft is too low’. It cost me £10,000 to be told what I already knew.”
He then tried to leave the bank, but was warned there would be breakage costs for exiting the loan.
“I assumed they were standard breakage costs, a small percentage. But it was £160,000 if I wanted to leave the bank, which they never indicated when they got us to change the loans,” said Dykes. “So I was trapped with these costs so I couldn’t leave them. Then it started to come out in the wash what these TDLs were. The bank … called me to a meeting and said they were no longer going to support the hospitality industry so ‘if you’re looking for any more money, forget it’.”
Dykes said he was forced into a corner with a damaged credit rating and facing administration when Clydesdale made him an offer.
They agreed they had mis-sold him the TBL, but said he would have taken it even if he had known all the facts.
“They are now forcing me to sell both hotels or they’ll pull the plug on me,” he said. “Basically they’ve ruined my pension, they’ve ruined my life through sheer and utter greed. I’ve lost over £1m and that was my pension.”
A spokesperson for RGL Management told The National: “We bring funding and expertise to those former Clydesdale customers who lost substantial amounts in purchasing these products and our claimant group is growing quickly.”
A Clydesdale Bank spokesperson said: “We have seen media reports of a potential claim being considered in relation to Tailored Business Loans, however we have not received any such claim to date from RGL Management Ltd and it is therefore not possible to comment on speculation around any potential case or the basis for any claim.
“In relation to TBLs, this is a long-standing historical matter which has been subject to significant scrutiny and which the bank has been working through with customers as part of a wide-ranging remediation programme, in an open and transparent manner.”
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