More than 500 small businesses have joined forces to take legal action against Clydesdale and Yorkshire Bank over a mis-selling claim.
Legal action is being levied against the Clydesdale and Yorkshire Banking Group (CYBG) – now known as Virgin Money – and its former owner National Australia Bank by hundreds of firms.
The businesses claim they were unfairly charged high break fees when they sought to end the loans early, while it also alleges there was “deliberate and systematic” overpricing of the interest rates on the loans without first informing customers. The loans were sold between 2001 and 2012.
The lawsuit is being handled by claims firm RGL Management, which said another 365 small businesses had joined group action. The total number of claimants now stands at 509.
The long-running legal action is now set for a case management conference on December 14 to 16.
It is thought this could set the stage for the case to go to court in the second half of 2021.
RGL said the claims are expected to amount to hundreds of millions of pounds, with the action representing 867 individual loans.
But this could just be the tip of the iceberg as RGL believe around 6,500 companies were sold the loans.
James Hayward, chief executive of RGL Management, said: “With the first court date now on the horizon, we are more confident than ever of securing the hundreds of millions of pounds in compensation owed to Clydesdale and Yorkshire Bank customers.
“There is an overwhelming body of evidence to prove the banks’ unlawful treatment of their fixed-rate loan business customers.
“RGL is now redoubling its book building efforts to ensure as many borrowers as possible receive the compensation they deserve.”
Ian Lightbody, chairman and founding member of the Virgin Money Remediation Support Group, hailed the increase in claimants to the action as a “great achievement”.
Virgin Money was not immediately available for comment.
A spokesman for NAB said: “NAB declines to comment while the matter is before the court.”
Clydesdale and Yorkshire bank group CYBG was formed in 2016 after the NAB divested its UK operations and was recently renamed Virgin Money after a £1.6bn takeover of Sir Richard Branson’s banking group.