Originally written by Timothy Adler on Small Business
Small business owners who feel they’ve been unfairly treated by high-street banks may be able to sue them for the first time.
Banks including Clydesdale, Lloyds and RBS allegedly drove thousands of businesses to the wall after making inappropriate loans, and then supposedly asset stripped those businesses for millions of pounds once they were insolvent. RBS in particular has been singled out for criticism — its department set up to help businesses in trouble in fact dismantled 90pc of SMEs referred to it.
In an unprecedented move, MPs have petitioned the Supreme Court to change the law on “reflective loss”. If successful, many business owners will be able to sue their banks for pushing them into insolvency.
The All-Party Parliamentary Group (APPG) on Fair Business Banking intervened in an ongoing Supreme Court case on Tuesday, the first time an APPG has made such a move.
Kevin Hollinrake MP, co-chair of the APPG on Fair Business Banking, told Small Business: “SMEs may be able to sue banks that put them in an unwinnable situation.”
Grossly unfair
The APPG has intervened because of what it sees as a grossly unfair situation. At present, if a company falls into insolvency it moves