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Clydesdale Bank faces increased political pressure over tailored business loans

The Financial Conduct Authority has recently confirmed that more than 60,000 small businesses may have been sold unregulated commercial loan agreements that contain so-called “embedded swaps”. As matters currently stand, these commercial loans do not form part of the Independent Review whereby the banks have already agreed to review stand alone interest rate swap agreements. 
A letter to the Treasury recently disclosed by Martin Wheatley, Chief Executive of the FCA, raises serious concerns regarding these financial products with embedded swaps. His letter written in May 2013 was recently disclosed in response to an Early Day Motion seeking to address these matters. 
Clydesdale Bank is just one of a number of banks who have been involved in the selling of commercial loans with embedded swaps. Although marketed as “fixed rate loan agreements”, they can tie the customer into paying interest well above the current market rate for a substantially extended period. The customer cannot escape without having to pay huge break costs, sometimes as much as 25% of the outstanding loan amount.
Balfour+Manson are acting for a number of Clydesdale Bank business customers in claims involving Tailored Business Loans. If you have are experiencing any issues surrounding this matter and would like advice please contact Gordon Deane on 0131 200 1485.