Clydesdale Bank under the spotlight over Tailored Business loans

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Posted in:Banking and Finance|June 18, 2014 | Join the mailing list

The Chief Executive of Clydesdale Bank Plc, David Thorburn, has been questioned by the Treasury Select Committee over the banks Tailored Business Loan (“TBL”) sales.

These products have come in for criticism as customers have alleged, and Berg agrees, that they contain embedded interest rate hedging products such as swaps, which means that for all intents and purposes they have the same consequences as a directly traded
interest rate hedging product. The majority of TBLs are not included within the Financial Conduct Authority (“FCA”) led review and so customers have been denied the chance to seek redress for the losses caused as a result of the improper sale of these products. 
Clydesdale has agreed to review structured collar equivalent TBLs, but ot collars or swap equivalent TBLs.  This has caused a lot of confusion.

Clydesdale still maintains that these products do not contain embedded swaps but have accepted that the products behaved as if they did and that the distinction would have meant little to the customers who were sold TBLs. The bank’s Chief Executive, David Thorburn,
admitted that the bank could have provided better information and clarity to its customers but stated that no one could have predicted the sharp drop in interest rates that occurred in 2008.

Mr Thorburn did state that Clydesdale would co-operate fully if the Committee felt that a full investigation into the sale of TBLs to SMEs was required. However he gave no indication that the bank would be willing to include all of these products in the FCA
Led Review and allow their customers to seek redress for the losses caused.

Campaigner’s claim that the high charges and difficulties in refinancing associated with TBLs could have cost thousands of jobs across the UK but so far it has been extremely difficult for anyone affected to seek redress from Clydesdale. The FCA are doing very
little to rectify this situation and appear happy to let the bank dictate the policies.

Therefore it is likely that many SMEs will struggle to achieve adequate compensation (if at all) for the sale of these products despite the fact that Clydesdales Chief Executive admitted that they could have provided better and clearer information to its customers
when they were selling TBLs.

It comes as no surprise that Clydesdale is doing very little to help its customers affected by the sale of TBLs. The bank has previously informed Berg that it is not bound by any timetable with the FCA in respect of the FCA led review and as such will not issue
any redress offers any time soon. This is despite the fact that the review process is scheduled to come to an end shortly. Clydesdale has refused to provide even a suggestion of what their time-table is, which leaves a number of its customers stuck in limbo
and is contrary to what is being said publically by the bank. 

Clydesdale has consistently shown complete disregard for the hardworking SMEs that have been forced into these toxic loan agreements and the FCA appears unable or unwilling to do anything about it. As a result a large number of people may be left without any
form of redress for mis-sold products that may have ruined their businesses and deprived them of their livelihoods.

For more information about any of the above or for practical advice on this or any other aspect of banking and financial disputes, please contact
Kalvin Chapman
of the Berg Banking Litigation Team on 0161 833 9211 or email him at

(The information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Berg or any of its partners or employees. Professional legal advice should
be obtained before taking, or refraining from taking, any action as a result of this article.)

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