By Kristy Dorsey

Scottish firms claiming to have been mis-sold complex business loans by Clydesdale Bank have been told they can join hundreds of other SMEs in taking their case against the banking group to the High Court in London.

The claims relate to “tailored business loans” (TBLs) and fixed rate loans sold to customers of the Clydesdale and Yorkshire banks between 2001 and 2012, when they were owned by National Australia Bank (NAB).

The British banks were sold to Virgin Money in 2016, and are due to be rebranded to the Virgin Money name by the end of next year.  It is claimed the banks unfairly demanded break costs from borrowers who sought to terminate their loans early. It also claimed the bank inflated the fixed interest payable without first informing customers. 

Following a Case Management Conference earlier this month, it has been agreed that Scottish claimants can join in a class action already underway in England. This is expected to speed up the process, with no need for parallel litigation in the Scottish courts

The case is being led by solicitors Michelmores, litigation specialist RGL Management and group litigation support provider All Square Financial, which believe more than 6,500 customers took out such loans with claims that could run into hundreds of millions of pounds. To date, 509 claimants have joined the class action, 140 of whom are in Scotland

With the case expected to go to court in 2022, All Square said it will be stepping up efforts to reach the thousands of eligible businesses that have yet to sign on.  “We are delighted that the group action has now passed its first legal milestone,” managing director Daniel Hall said.  “However, with the case now in court, we are acutely aware that the window to join these proceedings might close soon."

He claimed that there likely remain "thousands of Clydesdale or Yorkshire Bank business customers who may be owed six, possibly seven figures" in relation to TBLs.  He added: "In such straitened times, we are keen to reach the many businesses who do not know that they are eligible to join this case, which is expected to recoup losses running to hundreds of millions of pounds.” 

Virgin Money has said it has investigated all historic SME conduct issues, and there is no merit in the allegations.