Clydesdale Bank Plc · DRN-2898567

The complaint A company, which I’ll refer to as “F”, complains about delays in its application for borrowing with Clydesdale Bank Plc (trading as Yorkshire Bank). The complaint is brought by F’s directors, but they are represented by the company secretary, Ms H. What happened F applied to Clydesdale for a loan of £25,000 on 11 March 2020. Clydesdale advised F that the borrowing would need to be in the form of an overdraft. And it was in the early stages of proceeding with an application when the government announced the Coronavirus Business Interruption Loan (“CBIL”) Scheme. Clydesdale emailed F on 23 March and said that a CBIL would be the best way forward. So it was agreed that a request would be referred to the bank’s specialist team. F’s CBIL application was picked up by the specialist team on 17 April. But around this time, the government was preparing to introduce a new loan scheme (the Bounce Back Loan Scheme) under which all applications of loans for £50,000 or less had to be arranged. So an application for a Bounce Back Loan of £25,000 was logged for F on 11 May 2020. Clydesdale approved the application and F drew down a loan of £25,000 on 19 May. F complained to Clydesdale about the time it had taken to provide the funds and said that the delay led it to miss out on a job that would’ve yielded a gross profit of £25,000. Clydesdale said it hadn’t done anything wrong. It said that there’d been a short delay in providing the Bounce Back Loan, but this was due to difficulty in verifying information within the application. It also highlighted the impact of the pandemic and related lockdown measures from 23 March, which had affected the bank’s operations. Unhappy with Clydesdale’s response, Ms H referred F’s complaint to us and it was reviewed by one of our investigators. While she didn’t think the bank was responsible for any unreasonable delay in providing the funds, she thought it could’ve kept F better updated – noting that Ms H had chased things up on a number of occasions. So for the inconvenience caused, she recommended that Clydesdale pay F compensation of £150. Clydesdale accepted our investigator’s recommendation but F didn’t. Ms H maintained that delays on the bank’s part had meant that F missed out on a business opportunity, as it hadn’t received the funds in time to proceed. So with no resolution to the matter, it was passed to me to decide.

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What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. Having done so, I’ve reached the same conclusion as our investigator and for largely similar reasons. I’ll explain why. It took a little over two months to arrange the borrowing that F was looking for – with its initial application for an overdraft made on 11 March and the Bounce Back Loan being drawn down on 19 May. I appreciate the urgency on F’s part and I can see why it is unhappy that things took as long as they did. But having reviewed the timeline of events and how Clydesdale handled F’s requests during this time, I don’t think the bank was responsible for any excessive or unreasonable delays. While F had initially wanted to borrow £25,000 through a loan, Clydesdale was unwilling to lend in that way. That was a decision it was entitled to make. So on 18 March it told F that it would proceed with an overdraft application, and over the days that followed it gathered some of the information it needed from F (such as cashflow projections and identification documents). However, a few days later, the government launched the CBIL Scheme. Given this, the bank directed F to make an application for a CBIL instead. This was reasonable – the terms of the CBIL were highly likely to be preferential to anything Clydesdale would otherwise have offered F. There was then a slight delay in progressing the CBIL application, which wasn’t picked up for review by the relevant team until 17 April. I can see that this was longer than ideal for F and appreciate why it may seem unacceptable. But I think it’s fair to bear in mind the unprecedented circumstances of the time. Clydesdale says the level of demand for borrowing under the Scheme was extraordinary, meaning it couldn’t review applications in line with its usual timescales. The bank had to roll the Scheme out at short notice, while also dealing with the wider impact of the pandemic on its operations. In that context, I don’t think the three-week timeframe that F experienced was unreasonable. By the time Clydesdale was in a position to move forward with F’s CBIL application, the government was rolling out a further loan scheme, the Bounce Back Loan Scheme. And, under the Scheme rules, this meant that borrowing of the amount F wanted could no longer be obtained under the CBIL Scheme, and had to be provided by way of a Bounce Back Loan. Clydesdale had no discretion in that – so it had to redirect F accordingly. The Bounce Back Loan Scheme was duly launched on 4 May. F obtained its loan a couple of weeks later, on 19 May. Taking into account the circumstances of the time, as noted above, I don’t think this was an unreasonable delay either. As I’ve not found that Clydesdale caused any unreasonable delays in providing F with the funds it was seeking, it follows that I can’t fairly hold it responsible for any losses that F may have incurred while it was waiting. I do, though, think that there were times when Clydesdale could’ve done more to keep F informed as to what was going on – in particular, with its CBIL application. I can see that F was put to some inconvenience in having to chase things up due to the lack of information about what would happen and when. Clydesdale has accepted this and offered to pay F £150. I think this is fair compensation in the circumstances.

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My final decision For the reasons set out above, I uphold this complaint in part and require Clydesdale Bank Plc (trading as Yorkshire Bank) to pay F compensation of £150. Under the rules of the Financial Ombudsman Service, I’m required to ask F to accept or reject my decision before 3 December 2021. Ben Jennings Ombudsman

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