Clydesdale Bank to be sued by small businesses before end of the year
A group of small UK business owners will take legal action against Clydesdale Bank before the end of the year because of loans it claims were missold to them.
The group of claimant business owners, numbering in their hundreds, announced plans to begin legal proceedings against the Scottish lender in July this year and has now confirmed it will take Clydesdale Bank to court in 2017, according to RGL Management, the law firm representing the group.
The claimants are believed to have taken out “tailored business loans” from Clydesdale Bank between 2002 and 2012, which supposedly came with high interest rates and fees related to “hidden” break clauses.
RGL Management has claimed that the tailored business loans locked customers into paying higher interest rates after the base rate set by the Bank of England fell to record lows during their loan periods.
In addition, customers that signed up for a “swap” feature in their loans to cover their backs in the event interest rates moved, experienced “disproportionate and crippling break costs” upon attempting to get out of their loan agreement early.
Claimants have said that Clydesdale Bank failed to properly inform them about the size and extent of the break fees they would be charged if they paid off loans before the end of their terms, which in some cases amounted to 50 per cent of the total loan value.
Although only a few hundred business owners are thought to make up the group taking Clydesdale Bank to court, chief executive at RGL Management, James Haywood, said that as many as 6,500 people may have been directly damaged by this particular product.
In a statement, Hayward said: “A lot of [customers] 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 Bank.”
He added that of the several hundred business owners taking legal action, the cost of claims made against Clydesdale Bank averaged £1.6m.
Clydesdale Bank, launched in Glasgow nearly 200 years ago, remains one only a handful of Scottish banks still permitted to print its own notes, and the lender’s very own new £10 note entered circulation last week, alongside that of the UK’s Royal Mint.
The case against Clydesdale Bank has received heavy scrutiny, since it was understood that RGL Management stood to earn 55 per cent of claimants’ successful action.
Read more: A business banking revolution? The best challenger banks for startups
Sign up to our newsletter to get the latest from Business Advice.