LONDON (Reuters) – Around 150 businesses have filed a lawsuit in London against Britain’s Clydesdale Bank and its former owner, National Australia Bank, alleging they were deceived when they took out business loans from the bank until 18 years ago.
RGL Management, a company that manages the group’s claim for small and medium-sized businesses, said Thursday it plans to add hundreds more plaintiffs to the lawsuit by the end of the year and recover hundreds of million pounds of losses.
James Hayward, CEO of RGL Management, said Clydesdale’s conduct towards its customers was “utterly disgraceful”.
He said RGL had also appointed lawyers in Scotland, where Clydesdale is based, to take legal action as soon as the law is changed to allow collective complaints there.
A Clydesdale spokeswoman said the bank had not yet received details of the case. In the meantime, the bank said it continued to strongly refute any suggestion that it had failed to thoroughly investigate historical cases involving small and medium-sized customers in a “massive remediation program “.
National Australia Bank (NAB) was not immediately available for comment.
RGL’s complaint alleges a series of offenses against the banks, including deception, misrepresentation, negligent misrepresentation, breach of contract and unjust enrichment.
It alleges that Clydesdale and NAB deliberately or recklessly misrepresented a contractual ability to charge a break cost to terminate loans early – to which they were not entitled – and deliberately added hidden margins to interest charges on the fixed rate loans.
The action, filed after UK politicians castigated lenders for predatory practices against small businesses, relates to around 8,300 Bespoke Business Loans (TBLs) that Clydesdale issued between 2001 and 2012.
The case is being litigated in London by law firm Michelmores, is funded by Augusta Ventures and has post-event insurance in place to cover any legal costs that may be incurred, RGL said.
Robert Hanna, managing director of Augusta, said the legal industry has a duty to enable access to justice for those suffering loss.
UK banks have already paid out more than 2 billion pounds ($2.6 billion) in compensation to small businesses who claim they were missold interest rate hedging products.
Around 6,000 Clydesdale customers have been sold TBLs, with built-in interest rate hedging features, which are not eligible for compensation as they are classified as commercial loans.
In a 2015 parliamentary report, lawmakers said Clydesdale had admitted that TBLs’ terms and conditions letters were not as clear as they could have been.
($1 = 0.7670 pounds)
Reporting by Kirstin Ridley; Editing by Mark Potter and Kirsten Donovan