Clydesdale Bank is facing a new £1 billion mis-selling claim brought by small businesses who claim they were mis-sold loans which resulted into some going bust.
The allegations revolve around a product called Tailored Business Loans (TBL) sold between 2001 and 2012 which contained controversial interest rate swaps.
TBLs frequently carried very high break fees with one customer claiming their £1 million loan faced a break cost of up to £200,000. Other firms claim they were faced with break fees as high as £½ million.
The loans themselves were on fixed rates, but the firms claim they were not properly informed of the fees they would be charged if they tried to pay off the loans early.
The slashing of interest rates to a record low of 0.5% in the wake of the financial crash in 2008 forced up the costs because of the interest rate swaps element
The action is being brought by RGL Management Ltd who say they already have ‘several hundred’ firms on board.
RGL chief executive, James Hayward, said: “We know that there are about 6,500 people who were damaged by this product. A lot of them may not even know they’ve got a claim. Some may think, ‘Oh silly me, perhaps I didn’t read all the documents carefully enough’, when in fact they’ve been the victims of Clydesdale.”
The bank says it has not yet received any claim from RGL, adding that it is ‘a long standing historical matter’ and that it has already made ‘significant progress in resolving the vast majority of cases.’
It has set aside a total of £92 million for customer redress on complaints, which is said to include possible compensation with issues relating to TBLs.
Complaints against banks made by small firms are not subject to the same rules as those made by individuals for things like PPI with no access to an ombudsman if the firm wants to appeal a decision which goes against them.
Financial Conduct Authority (FCA) chief executive Andrew Bailey said last week there should be a tribunal or ombudsman style service available for small firms to get justice if they feel they have been badly treated by banks.