LONDON (Reuters) - About 150 companies have launched a London lawsuit against Britain’s Clydesdale Bank and its former owner, National Australia Bank, alleging they were deceived when they took business loans from the bank up to 18 years ago.
RGL Management, a company managing the group claim for the small and medium-sized businesses, said on Thursday it expected to add hundreds more claimants to the lawsuit by year-end and recover hundreds of millions of pounds in losses.
James Hayward, the CEO of RGL Management, said Clydesdale’s conduct towards its customers has been “utterly disgraceful”.
He said RGL had also instructed lawyers in Scotland, where Clydesdale is based, to bring proceedings as soon as legislation is changed to allow group claims there.
A spokeswoman for Clydesdale said the bank had yet to receive details of the case. In the meantime, the bank said it continued to strongly refute any suggestion that it had not fully investigated historic cases involving small and medium-sized customers in a “wide-ranging remediation programme”.
National Australia Bank (NAB) was not immediately available for comment.
The RGL claim alleges a string of offences against the banks, including deceit, misrepresentation, negligent misstatement, breach of contract and unjust enrichment.
It alleges Clydesdale and NAB deliberately or recklessly misrepresented a contractual ability to charge a break cost to end the loans early - to which they were not entitled - and deliberately added hidden margins into interest charges on fixed-rate loans.
The action, filed after British politicians have lambasted lenders for predatory practices against small businesses, relates to around 8,300 Tailored 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 after-the-event insurance in place to cover any legal costs that might be incurred, RGL said.
Robert Hanna, a managing director at Augusta, said the legal industry had a duty to enable access to justice for those suffering loss.
Banks in Britain have already paid out more than 2 billion pounds ($2.6 billion) in compensation to small companies that claim they were mis-sold interest rate hedging products.
Around 6,000 Clydesdale customers were sold TBLs, with embedded interest rate hedging features, which are not eligible for compensation because they are classified as commercial lending.
In a parliamentary report published in 2015, lawmakers said Clydesdale had admitted the terms and conditions letters for TBLs were not as clear as they could have been.
($1 = 0.7670 pounds)
Reporting by Kirstin Ridley; Editing by Mark Potter and Kirsten Donovan