Revealed: investors urged to join High Court fraud claim against banks

25 November 2020 | Investment

New data has revealed that thousands of affected property businesses across the UK qualify to join a major High Court fraud claim against Clydesdale and Yorkshire Bank.

Late last week, Yorkshire-based All Square Finance Ltd (allSquare), a specialist provider of claims management and litigation support services, announced the final phase of its bookbuild for ‘a major High Court case against Clydesdale Bank (including Yorkshire Bank; now Virgin Money) and the National Australia Bank in relation to its selling of Tailored Business Loans (TBLs) and Fixed Rate Loans’.

The announcement comes after new data was able to identify which business types and sectors are particularly affected from the thousands who took out these loans. The data also gives an indication of the size of claim which those who join the action can expect to receive.

The analysis shows that Clydesdale or Yorkshire Bank customers in the property investment sector are among those worst-affected, accounting for thousands of eligible loans. Alongside this, businesses in the hospitality, farming, construction and retail sectors have also been badly impacted.

The largest eligible businesses are now estimated to be owed millions of pounds by the Bank, though average claim sizes are expected to be in the hundreds of thousands. Even the smallest loan sizes are anticipated to be owed thousands of pounds.

In light of this new information, and due to the encouraging progress of the legal action, allSquare is today ramping up the final phase of its bookbuild ahead of the first court hearing in December.

The case – being pursued in London’s High Court – is being brought in partnership with specialist litigation firm RGL Management and Michelmores LLP.

The Group Action (sometimes colloquially known as a ‘class action’) alleges that Clydesdale Bank (including Yorkshire Bank) and the National Australia Bank behaved fraudulently and dishonestly in the sale of these loans, with many thousands of these Clydesdale and Yorkshire Bank TBL and Fixed Rate Loan customers perhaps still unaware that they have a valid claim.

allSquare explains that anybody in England, Wales or Scotland who took out a Tailored Business Loan or a Fixed Rate Loan from Clydesdale Bank or Yorkshire Bank is eligible to sign up for the above Group Action claim.

More than 6,500 customers took out TBLs from Clydesdale between December 2001 and July 2012, meaning that there remain thousands of businesses who are yet to join.

The company is urging anybody who thinks they may be eligible to join the Group Action to contact allSquare immediately. They can then discuss their claim and the process involved. Joining or enquiring about the claim costs nothing, allSquare reassures.

That said, the need is pressing as the time to claim is running out. The above Group Action is the only one which seeks to gain Clydesdale and Yorkshire Bank TBL and Fixed Rate Loan customers the compensation they are owed.

With the first court hearing scheduled for December, the time at which people will no longer be able to join is fast-approaching, allSquare warns.

As such, those who believe they may be eligible are urged to make contact now, before it is too late.

Daniel Hall, managing director at allSquare, said: “With a date in court now set for this December, this is the last push to reach anybody who has not joined those thousands of claimants who are already safe in the knowledge they have signed up for the redress they are owed. Clydesdale and Yorkshire Bank’s institutional dishonesty when selling Tailored Business Loans (TBLs) led to the destruction of countless lives and livelihoods – but any customer who was sold a Fixed Rate Business Loan or TBL is eligible to join this compensation claim, which is expected to run into the hundreds of millions of pounds.”

He added: “In the current business climate, we are particularly keen to reach people facing difficult circumstances who may not realise they are owed thousands, and in many cases six or seven figures, by the bank. The data we have analysed today allows us to reach out to those sectors that we know were particularly affected and bring this to their attention.”

“On a no win-no fee basis, we urge anybody who thinks they might be eligible to get in touch immediately with the allSquare team, who will be happy to discuss their situation. The team has been working hard to gear up capacity for the high volume of claims which are now coming in. There is no other group claim pursuing Clydesdale and Yorkshire Bank for TBL and Fixed Rate Loan compensation and with the legal process advancing fast, anybody who doesn’t sign up at this stage will sadly miss out.”

You can read more about the alleged mis-selling of tailored business loans by the banks here and here.

A case study – Stephen Langan

allSquare has provided the following case study – a man who owned a property portfolio business in Lancashire and dealt with Yorkshire Bank from 2005-2011 – to show the stresses and strains experienced by those affected by the alleged mis-selling.

Stephen’s story

Yorkshire Bank pressurised Stephen for 18 months to switch from a variable to a fixed-rate loan. When he eventually concurred, and his monthly costs sky-rocketed, they ignored his requests to make changes. They then insisted that the product switch was his idea and falsified documents to support this. Stephen overpaid more than £200,000 to the bank over the next five years. In 2011, the bank decided to end their support, calling in £2 million and springing a surprise break cost of £244,000 – even though closing the product early was their choice.

Stephen had a good career in financial services and started a small property development venture as a sideline which eventually became successful enough for him to step away from his main job. He bought his first residential property in Cleveleys, Lancashire, in 1999, partially funded with a loan from Yorkshire Bank. He went on to purchase over 100 units with the help of a £1.5 million variable rate loan from Yorkshire Bank, as well as borrowing from Paragon, another commercial lender. The repayments were covered by rental income and his plan was to eventually sell the properties and use the proceeds to fund a comfortable pension.

In 2005, Yorkshire Bank recommended that he change his loans from variable to fixed-rate, claiming that this would protect him from almost certain interest rate rises. Stephen followed the markets and had heard nothing to support this, so decided not to change his loans. However, the bank continued to apply pressure over the next 18 months.

Eventually, he was coerced into moving two thirds of his borrowing to a vastly more complicated fixed-rate loan. The interest charged on the new loan cost much more, but the bank ignored Stephen’s attempts to change the deal. He was also told that he would have to pay a large break cost to exit the loan; something he hadn’t been informed of during negotiations.

Following the financial crash of 2008, he ended up stranded, paying cripplingly high interest charges. If the bank hadn’t pressured him to change product, at this point he would have benefitted from the lowest interest rates on record.

His continued attempts to leave the loan were unsuccessful, with the bank now changing tack and claiming it was he who had requested the change. It even created false documents to support this version of events. Over a five-year period, his business was crippled by overpayments of more than £200,000.

In 2011, the bank stated it would no longer support his business and demanded immediate repayment of the loan, £2,100,000 plus a break cost of £244,000, despite the early termination of the loan being its decision.

Stephen was unable to pay this, so the bank had insolvency practitioners sell off his entire portfolio at a significant loss. The financial instability then meant his properties with Paragon went the same way. He lost everything, including the house he lived in.

Stephen has been financially ruined, and his dream of a comfortable retirement is now gone. The toll on his health, both mental and physical, has been extreme. The stress of his ordeal triggered several serious conditions which have required emergency life-saving surgery. His condition remains chronic. Each of his current misfortunes can be traced back to the bank’s actions towards him.

*You can get in touch with the allSquare team here.

This post has originally been featured in Property Investor Today.