Clydesdale faces court over ‘fraud loans’ claim

CLYDESDALE Bank is at the centre of legal action over allegations it signed up to fraudulent loans to Scots businesses.

The case at the High Court in London will see the bank, along with i ts partners Yorkshire Bank – now Virgin Money – and the National Bank of Australia, face accusations that it hiked interest rates and introduced hidden costs.

The l i tigation being brought centres around the various banks’ Tailored Business Loans (TBLs) and fixed-rate loans products.

A preliminary hearing, held virtually last week, heard claims that the loans at the centre of the case were taken out between December 2001 and July 2012.

According to law firm allSquare, which is acting for the claimants, 590 claims – 140 from Scotland – are being prepared for submission to the court.

However, Clydesdale Bank has disputed the allegations and said only three claims were being progressed in the court.

The accusations relate to fixedterm break charges, when a customer attempts to repay or change a loan before an initial introductory period has expired.

Shortly before last week’s hearing, lawyers for the defendants confirmed the banks’ agreement for existing Scottish claimants to have their case tried as part of the ongoing litigation in England, rather than have to chase separate legal action north of the Border.

Daniel Hall, managing director at all-Square, said: ‘We are delighted that the action has now passed its first legal milestone.

‘However, with the case now in court, we are acutely aware that the window to join these proceedings might close soon.

‘There likely remain thousands of Clydesdale or Yorkshire Bank business customers who may be owed six, possibly seven figures, due to the banks’ systemic dishonesty regarding TBLs.

‘In such straitened times, we are keen to reach the many businesses who do not know they are eligible to join this case, which is expected to recoup losses running into the hundreds of millions of pounds. To be clear: any customer who took out a TBL or fixed-rate business loan with Clydesdale or Yorkshire Bank should be owed compensation.’

Mr Hall added: ‘We are also highly encouraged that the significant numbers of Scottish claimants who have already signed up will now be part of the High Court proceedings in London.

‘Given, however, that a large proportion of TBLs were sold in Scotland, there remain thousands of Scottish customers of these banks who are yet to enjoy this security by joining the ongoing legal action.

‘We urge anybody who thinks they might be eligible to get in touch immediately with the all-Square team.’

A Clydesdale Bank spokesman said the case was at an ‘early stage’, and added: ‘We continue to believe there is no substance to the set of allegations being made and that the claimants’ case is weak and poorly pleaded. We are confident of defending our position when the case proceeds to a full trial.’