National Australia Bank Ltd. and its former U.K.-based subsidiary Clydesdale Bank Plc are facing a lawsuit in the U.K. over loan products sold to customers by the latter, The Sydney Morning Herald reported Dec. 22.
RGL Management, which is representing "a large group of claimants," filed a lawsuit over interest rate hedging products known as "tailored business loans" sold by Clydesdale Bank when it was still owned by NAB. While some customers have been compensated, the case will argue that these businesses may be entitled to further damages. The loans have been said to be complex and expensive.
NAB off-loaded its stake in the U.K. bank in 2016 on the back of poor performance, which included compensation payments related to the misselling of financial products.
RGL said it delivered a "letter before action" alerting NAB and Clydesdale Bank to the lawsuit. It did not disclose claim details, except that the "causes of action ... include allegations of dishonesty and fraud."
A spokesman for Clydesdale Bank's owner, CYBG Plc, said the allegations were "not accepted by the bank and if necessary will be defended in the strongest terms possible."
An NAB spokesman declined to comment, the report added.