A FINANCIAL watchdog has ruled a Scottish hotelier was mis-sold a complex loan product by Clydesdale Bank but is not entitled to any compensation.

Alf Berry had to pay almost £10,000 to get out of the agreement after selling a hotel in Pitlochry six months before his five-year loan period came to an end.

He says he has taken his complaint forward on principle rather than for monetary redress.

Now the Financial Ombudsman Service (FOS) has concluded Clydesdale did not provide enough information for a customer to realise the potential cost. However the ombudsman felt Mr Berry had not suffered any disadvantages.

The case is the latest to emerge involving Clydesdale's small and medium enterprise customers in relation to the bank's fixed rate tailored business loans (TBL).

These products are excluded from the ongoing review by the banks of mis-sold interest rate swaps. Some industry experts say the fixed rate TBL has the same variable break fees as the loans covered by the review.

The bank has previously told one customer that the TBL contained an 'embedded swap'.

However the Financial Conduct Authority has said the fixed rate TBL are purely commercial and outside its remit, in spite of growing pressure from MPs.

But with Mr Berry's case the FOS appears to have given a clear ruling that if the break fees attached to a fixed rate TBL were not fully explained and illustrated to the customer, it was mis-sold.

The ombudsman has provisionally concluded Mr Berry may have required a fixed rate loan anyway, so has not suffered disadvantage.

Thousands of SMEs have complained that hidden break fee liabilities, which were added on to their loans, prevented them from financing or refinancing their businesses and in some cases pushed them under.

The FOS adjudicator says the selling information provided by Clydesdale Bank was "not sufficient for the (customer) to have predicted the potential magnitude of the break costs" because it did "not draw adequate attention to the downside risk".

But he concludes that because less than half of the £500,000 loan had been fixed, Mr Berry still had flexibility, and because he had a "five-year business plan" he was unlikely to need to exit the loan early. The fix, meanwhile, had given "protection against interest rate rises" in 2007.

Mr Berry said: "The bottom line is that we are the ones who have suffered a £9551 loss due to the mis-sell, regardless of the length of our business plan."

Meanwhile a provisional ruling by the FOS against the Clydesdale and in favour of St Andrews hotelier Jim McGrory is going to the final stage of adjudication.

If upheld it will see Mr ­McGrory's £562,000 fixed rate TBL unwound, with a refund of interest and cancellation of break penalties totalling more than £150,000.

Clydesdale chief executive David Thorburn last month said the bank was "discussing it with the customer" but Mr McGrory said he had not accepted its offer to cancel the penalties, with no other redress, if he dropped his complaint.

Both cases could now take six to nine months to receive a final FOS adjudication.