SIMON BAIN
A claims firm acting for small businesses who allege they were mis-sold complex loans has complained of “inconsistent” decisions by Clydesdale Bank and by the ombudsman.
Aperia Financial says it has won more than £100,000 in compensation but says the bank has appeared more willing to settle with some types of customer than others. “For example, housing associations tend to receive more favourable responses than the broad spectrum of diverse business owners,” said Aperia’s Jonathan Bell.
He said the ombudsman too had appeared to be inconsistent when examining whether small businesses were made fully aware of the breakage fees associated with certain Clydesdale Bank loans.
Bathgate-based spraying services company AJM had taken out a £400,000 loan at 8.54 per cent in 2007, Mr Bell said, and been told in 2009 that it would cost £45,000 to vary it. Owner Albert McMillan complained that he had never been warned of the magnitude of the break fee, which left him unable to repay the loan when it became necessary for his business.
Clydesdale Bank has always maintained that it explained the break fees fully to all customers.
In its response to AJM the bank said it had warned of “substantial” break costs, but it also accepted that “substantial may mean different things to different people”.
The Financial Ombudsman Service, in a final adjudication, concludes that the bank “gave insufficient prominent to break costs and failed to give AJM any idea of the potential size of them to enable AJM to make a fully informed decision”.
But the ombudsman goes on to say he agrees with the bank that Mr McMillan would still have accepted the product even if he had known about the penalties, and he therefore suffered no detriment.
Mr Bell said: “We have seen previous ombudsman decisions that would support the fact that failure to explain this impact was enough to make a sale null and void. We wonder whether small business people are getting a fair hearing from the ombudsman.”
A spokesman for FOS said: "The ombudsman looks at every case we receive on its own merits – while one case may look materialistically the same to another, small details can lead to different outcomes. In this instance, the information we had meant that we were unable to say the borrower had been treated unfairly.”
A spokesman for Clydesdale Bank said: “We cannot comment on a specific case but every case is dealt with on its own merits, and we are confident that it is done so fairly and that Ombudsman decisions are applied consistently.”
Meanwhile John Glare, founder of the NAB Customer Support Group of over 130 small businesses, has returned to court in his legal action against the Clydesdale over the sale of a 25-year loan in 2007.
Former conference centre owner Mr Glare was asked to pay break costs of £780,000 on the £3.9million loan from the bank, was subsequently forced into bankruptcy, and in 2012 he formed the action group.
His lawyer Gordon Deane, litigation partner at Balfour & Manson in Edinburgh, claimed a breakthrough in the case last November, saying that the Clydesdale had admitted the sale to Mr Glare was unsuitable had breached its internal standards. The bank however responded that this was misleading.
The action returned to the Court of Session yesterday, with procedural arguments ahead of a possible eight-day hearing.
Clydesdale Bank said it could not comment on the case.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here