National Australia Bank could be facing financial mis-selling claims of £1bn

National Australia Bank (NAB) which operates under the Clydesdale Bank and Yorkshire Bank brands in the UK, may have underestimated the amount of money it needs to set aside to compensate victims of mis-sold financial products by hundreds of millions of pounds.

All Square, the financial mis-selling claims specialist, has estimated that NAB’s potential exposure to mis-sold Tailored Business Loans (TBLs) and standalone Interest Rate Hedging Products (IRHPs), could be between £1-1.5 billion. In contrast, NAB, through Clydesdale Bank, has only set aside £250 million to cover compensation claims in the area.

“All Square has made its own estimation of the potential mis-selling bill which could represent a gap compared to the current levels provided for”, said Daniel Hall (pictured), the Managing Director at All Square.

“We analysed the potential mis-selling bill based on a number of scenarios and calculated a range from £1-1.5 billion for direct product losses. If you include consequential losses, then this figure could be higher,” he said.

Hall also added that with just over 500 complaints received by Clydesdale relating to TBLs over 13 years, it expected the number of complaints to increase over the coming months as awareness of this latest mis-selling issue grows.

In its full year results published today, NAB indicated a firm intention to sell the UK bank, signalling that it was an “absolute priority”.

Andrew Thorburn, the bank’s chief executive reported: “While our Australia and New Zealand franchises are in good shape, it is disappointing to record a full year results that included $1.5 billion after tax in UK conduct provisions and other impairments.”

Mark Dugdale