London | Lawyers behind the British class action against National Australia Bank and its former subsidiary Clydesdale & Yorkshire Bank have announced the recruitment of up to 550 new claimants to the lawsuit, in a bid to inject fresh momentum into the long-running wrangle.
RGL Management, the London claims management firm run by Australian lawyer James Hayward, has been marshalling claimants for about 18 months to challenge the two banks in court over about 8300 fixed-rate business loans that Clydesdale issued to British customers between 2001 and 2012.
On Tuesday RGL announced it had teamed up with All Square Finance Limited, which like RGL has been rounding up businesses and individuals with potential claims arising from the so-called "Tailored Business Loans" (TBLs) affair. AllSquare has up to 550 claimants on its books and RGL already has almost 500 potential litigants of its own, so the alliance could perhaps double the number of parties to the action.
"Clydesdale and NAB now have a bigger, stronger and more determined group to face. Our case is strong and we will issue proceedings in due course," Mr Hayward said.
NAB is on the hook in this case because it owned the regional British bank until 2016, before spinning it off in a demerger after years of underperformance and big compensation bills for mis-selling complex financial products. The standalone Clydesdale & Yorkshire Bank (CYBG) is listed on the ASX as well as the London Stock Exchange, and most of its shareholders are Australian.
The TBLs at the heart of the dispute were purportedly fixed-rate loans, but RGL says they contained embedded or hidden swaps that were not disclosed to customers. This turned what customers thought was a straightforward fixed-rate loan into an interest-rate hedge product. As a result, interest repayments could spiral and break fees were exorbitant. Some claimants have said the loans drove them out of business.
NAB acknowledged the threatened lawsuit in its half-yearly result in May, saying RGL had sent the bank a warning letter last December.
"The letter makes various allegations against NAB and CYBG in relation to the sale of fixed-rate tailored business loans to customers of CYBG during the period from 2001 to 2012. The potential outcome of any proceedings, which may arise, cannot be determined with any certainty at this stage," the bank's half-yearly report said.
NAB has kept a contingency fund worth more than £148 million ($267 million) to protect itself from liabilities arising from its time as Clydesdale's parent, but this was largely designed as a shield against CYBG's exposure to the multi-billion pound Payment Protection Insurance (PPI) mis-selling scandal that swept through the British banking sector in the past decade. The half-yearly NAB report said the amount in this fund would soon be reduced to zero, following another PPI claim by Clydesdale.
RGL has been conducting roadshows and claimant workshops in British cities as part of its preparations for the litigation, although it hasn't set a date to file its suit in court.
"RGL is currently in pre-action protocol correspondence with Clydesdale and is likely to issue proceedings in early 2019," the claims firm said in a statement.
While there may be 6000 or more individuals and their businesses who were potentially affected, not all will fit the template for this lawsuit. The lawyers will have to sift the claimants' cases individually before adding them to the potential suit, which means the start of court proceedings could still be some way off.
RGL is funded by Augusta Ventures, a specialist provider of litigation funding that will bankroll the claimants' legal costs and will likely take first claim on any payout.
A British parliamentary committee in 2015 lent weight to RGL's accusations, saying the bank's terms and conditions for the TBLs were not in plain English. The loans had the risks and complexities of regulated hedging products but none of the safeguards, the politicians said.
At the time, Clydesdale issued a statement saying it had made progress in reviewing the TBLs and was paying suitable compensation where needed. RGL says on its sueclydesdale.com website that even businesses, which have received compensation as part of the bank's own redress procedure, could still be entitled to claim damages through the lawsuit.This article was first published by https://www.afr.com
Author: Hans van Leeuwen
Bank Victims Monday, 05 November 2018 09:42 Comment Link
This is a snip-it of the latest class action against NAB which was reported in the Australian Financial Review on the 27th September 2018.Report
NAB has been sued in a consumer class action for selling junk credit card insurance to students and welfare recipients, with more banks likely to be hit by similar actions.
Class action law firm Slater and Gordon said on Thursday it has filed a class action in the Federal Court against NAB and MLC for selling worthless credit card insurance to customers.
The action comes on the eve of the banking royal commission's interim report, which will identify policy issues in consumer credit.
The action alleges NAB and its wealth arm MLC acted unconscionably in breach of the Australian Securities and Investment Commission Act by pushing credit card insurance to customers who would be ineligible to claim the main benefits from the policy.
These customers included students, unemployed people and people on disability pensions.
Slater and Gordon is running the action on a no win, no fee basis and there is no litigation funder involved. It is also considering further actions against the other banks.
I hope this will help.