UK group action against Clydesdale, Australia's NAB heads to High Court

UK group action against Clydesdale, Australia's NAB heads to High Court

Reuters  | Oct 15, 2020 20:10

UK group action against Clydesdale, Australia's NAB heads to High Court

By Kirstin Ridley

LONDON (Reuters) - Almost 370 businesses have joined a group action suing Clydesdale Bank (L:VMUK) and its former owner National Australia Bank (AX:NAB) in a dispute over small business loans that is set for its first day in London's High Court in December.

The group, which alleges businesses were deceived between 2001 and 2012 when buying fixed rate Tailored Business Loans (TBLs), has snowballed since last year's launch and now represents 509 smaller businesses and 867 individual loans, according to claims management company RGL Management.

RGL, which filed the latest tranche of claims on Thursday, alleges smaller businesses were wrongly told they faced hefty costs for terminating fixed-rate TBL loans early and that banks inflated interest rates.

RGL is alleging deceit, misrepresentation, breach of contract and unjust enrichment by the banks, adding that TBL borrowers "unknowingly and unnecessarily paid hundreds of millions of pounds" of additional costs and interest.

Clydesdale parent Virgin Money (LON:VM) UK dismissed the case as without substance or merit, adding it would continue to defend its position robustly.

"Over recent years we have worked hard to investigate all historic SME (small and medium-sized enterprise) conduct issues and we are confident we have done the right thing for those customers involved," a spokesman said.

NAB said it did not comment on matters before the court.

A one-and-a-half day pre-trial hearing has been scheduled between Dec. 14 and 16.

More than 6,000 customers of Clydesdale and its Yorkshire Bank brand bought around 8,000 TBLs with embedded interest rate hedging features, classified as unregulated, commercial loans, that left customers facing heavy costs to unwind the hedge if they wanted to renegotiate the loan as interest rates fell.

Abhishek Sachdev, a derivatives expert, says a vast number borrowers, ranging from unsophisticated SME customers to large local authorities, were sold derivatives embedded into loans without their knowledge or understanding.

© Reuters. FILE PHOTO: The Clydesdale Bank logo is seen in St Vincent Place Glasgow, Scotland

($1 = 0.7674 pounds)

Related News

Latest comments

Add a Comment
Please wait a minute before you try to comment again.
Discussion
Write a reply...
Please wait a minute before you try to comment again.

Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

English (USA) English (India) English (Canada) English (Australia) English (South Africa) English (Philippines) English (Nigeria) Deutsch Español (España) Español (México) Français Italiano Nederlands Polski Português (Portugal) Português (Brasil) Русский Türkçe ‏العربية‏ Ελληνικά Svenska Suomi עברית 日本語 한국어 简体中文 繁體中文 Bahasa Indonesia Bahasa Melayu ไทย Tiếng Việt हिंदी
Sign out
Are you sure you want to sign out?
NoYes
CancelYes
Saving Changes

+

Download the Investing.com App

Get free real time quotes, charts and alerts on stocks, indices, currencies, commodities and bonds. Get free top of the line technical analysis/predictors.

Investing.com is better on the App!

More content, faster quotes and charts, and a smoother experience is available only on the App.

';