The Herald, 22.12.17
The press in Scotland picks up the story:
CLYDESDALE Bank is facing legal action from hundreds of small firms who took out complex business loans with the lender in the run up to and immediately after the financial crisis as part of a class suit worth up to £1 billion.
RGL Management, the claims firm which sued Royal Bank of Scotland on behalf of shareholders over the lender’s rights issue of 2008, is aiming to recover alleged losses on behalf of businesses who took out tailored business loans (TBLs) from Clydesdale and sister bank Yorkshire between 2001 and 2012.
The firm has served Clydesdale, now part of CYBG, and former parent group National Australia Bank (NAB) notice that it will “pursue damages for all losses incurred as a result of the bank’s actionable behaviour”.
But Clydesdale owner CYBG insisted yesterday that the allegations it has received in a letter before action (LBA) from RGL are “not accepted by the bank and if necessary will be defended in the strongest terms possible”.
According to RGL, TBL refers to a brand name given to more than 11,000 fixed and variable rate loans made to Clydesdale and Yorkshire customers when the bank was a wholly-owned subsidiary of NAB.
Of that number, more than 8,000 were fixed rate TBLs which RGL alleges came with hidden fees in the shape of hedging arrangements or “swaps” which were not disclosed to customers.
The swaps were designed to help small business customers hedge against increases in interest rates. However, it is understood fees were applied when rates fell, as they did in the aftermath of the financial crisis of 2008 and 2009.
Customers locked into TBLs were alleged to have been unable to switch banks, and faced fees break fees for early exit.
Giving evidence to the Treasury Select Committee in 2014, the then chief executive of Clydesdale Bank, David Thorburn, conceded that with the “benefit of hindsight” some customers had signed up for products they did not understand.
A spokeswoman for the bank said yesterday that it has made “dedicated substantial effort in recent years working through this historic matter, engaging openly and transparently with customers as part of a remediation programme”.
She added: “We have made significant progress in resolving the vast majority of cases.”
Compensation has been given to some customers affected through the bank’s redress programme.
However, the spokeswoman said the bank was unable to disclose how much it has paid to customers in compensation or how many customers have received redress so far.
Before demerging from NAB, Clydesdale made provisions for loans which contained swaps, as well as certain TBLs, of more than £100 million.
RGL said that even businesses which have already received compensation will be “entitled to claim damages for a full recovery of losses as a matter of law, as will businesses which have been into liquidation or dissolved.”
James Hayward, chief executive of RGL, said: “We have fired the first salvo. We expect Clydesdale and NAB to attempt to frustrate the process of loss recovery.”
He added: “We are fully funded, however, to deal with this approach and ready for a tough fight.
“Our claimant group has been waiting too long, and I’m delighted to give them the prospect of receiving proper recompense”.
A protest against Clydesdale by the business owners who are part of the action is scheduled to take place outside the bank’s head office in Glasgow city centre today.
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