Legal action lodged
Campaign group fires first salvo in Clydesdale battle
Bank battle: Group claims Clydesdale left customers facing losses
A group representing small firms has lodged its legal action against Clydesdale Bank and its former parent group National Australia Bank over an alleged mis-selling case.
RGL Management Ltd is taking action to recover losses it claims thousands of customers suffered after taking out tailored business loans offered by the bank.
RGL delivered a letter before action (LBA) to NAB’s head office in Melbourne yesterday evening and today delivers an LBA to Clydesdale’s head office in Glasgow. The bank is contesting the claims.
RGL’s legal team believes that even those businesses which may have already received some sort of compensation payment as part of the bank’s own redress procedure will be entitled to claim damages for a full recovery of losses as a matter of law, as will businesses which have been put into liquidation or dissolved.
The action is funded by Augusta Ventures, allowing small businesses to take on the banks in court on equal terms.
The legal team assembled to bring the case includes Andrew Onslow QC at 3 Verulam Buildings, who led the successful high profile RBS Rights Issue litigation. Other members of the legal team include Lisa Lacob, a barrister, also at 3 Verulam Buildings, and a team from Michelmores’ London-based offices, headed by partner Garbhan Shanks.
The LBA is in line with the standard pre-action protocol as prescribed by the court rules, and outlines the basis of the claim and the causes of action to be pleaded.
It is issued on behalf of the large group of claimants who have registered to date with RGL. The group continues to grow on a weekly basis.
Due to liabilities asserted by the bank as a result of entering into TBLs, the group says it became impossible for customers to switch banks.
James Hayward, CEO of RGL, said: “We have fired the first salvo. We expect Clydesdale and NAB to attempt to frustrate the process of loss recovery at every opportunity with the usual tactics and interlocutory manoeuvres of delay and obfuscation – designed to test our mettle and to drive up our legal costs from the very early stages.
“We are fully funded, however, to deal with this approach and ready for a tough fight.”
Mr Shanks added: “The case is strong based on the evidence. This has enabled us to make very targeted pre-action disclosure requests in the letter before action.”
In a statement on the case issued by the bank in the summer, Clydesdale said: “In relation to Tailored Business Loans, 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.
“We have made significant progress in resolving the vast majority of cases. Where we have reached a final agreement with customers, the cost of this has been covered by existing provisions as extensively disclosed in our financial reports.”
Tailored Business Loan refers to a brand of over 11,000 fixed and variable rate loans made to Clydesdale and Yorkshire Bank customers between 2001 and 2012. More than 8,000 of these were fixed rate TBLs which allegedly were associated with hedging arrangements or “swaps” not disclosed to customers.
The swap or hedging element was similar to that of the standalone interest rate hedging products used by some other banks.