Class action launched against Clydesdale Bank over Tailored Business Loans scandal

An organisation representing a group of businesses and individuals who took out Tailored Business Loans, or “TBLs”, with Clydesdale Bank, has this morning announced that it is to commence legal action against the Glasgow-based lender, as well as its former owner, National Australia Bank.

RGL Management Ltd said it delivered a letter before action (LBA) to NAB’s head office in Melbourne yesterday evening and will issue the same letter to Clydesdale’s head office in Glasgow today.

Although it has not said exactly how many businesses and individuals make up its class action (referring instead only to a “large group of claimants” which is growing “on a weekly basis”), RGL said the action “relates to conduct towards the thousands of small businesses and individuals who took out Tailored Business Loans (“TBLs”) offered by Clydesdale and Yorkshire Bank (which was a trading name of Clydesdale) at a time when it was a wholly owned subsidiary of NAB”.

Responding to the letter delivered to Clydesdale’s head office today, a spokesperson for CYBG, which is now the parent company of the bank, said: “We have received a letter requesting information relating to the historical sale of Fixed Rate Tailored Business Loans.

“The Bank has dedicated substantial effort in recent years working through this historic conduct matter, engaging openly and transparently with customers as part of a wide-ranging remediation programme. We have made significant progress in resolving the vast majority of cases.”

However, RGL’s legal team said it 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.

RGL’s action is funded by Augusta Ventures, which it says will allow small businesses to take on the banks in Court on equal terms.

The legal team assembled to bring the case includes Andrew Onslow QC, from 3 Verulam Buildings, who led the successful high-profile RBS Rights Issue litigation (the first major claim under FSMA s.90). Other members of the legal team include Lisa Lacob, a barrister at 3 Verulam Buildings, and a team from Michelmores’ London-based offices, headed by partner Garbhan Shanks.

In its statement today, RGL said its action is based on “allegations of dishonesty and fraud”.

In a statement it said: “Customers of Clydesdale and Yorkshire Banks have suffered significant losses as a result of entering into TBLs. All losses suffered including consequential loss will be pursued as part of the RGL action. Due to liabilities asserted by the Bank as a result of entering into TBLs, it became impossible for customers to switch banks. As locked-in victims, they were then often subjected to various other forms of abuse by the Banks, including the manipulation of property valuations resulting in LTV ratio covenant breaches, manipulation of overdraft facilities and the unfair levy of inflated bank charges.”

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. Our claimant group has been waiting too long, and I’m delighted to give them the prospect of receiving proper recompense for the losses they have suffered at the hands of Clydesdale, Yorkshire Bank and NAB.”

Garbhan Shanks, Partner at law firm Michelmores said: “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.”

The CYBG spokesperson added: “The allegations contained within the letter are not accepted by the Bank and if necessary will be defended in the strongest terms possible.”