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Ash
Ash, Solicitor
Category: Law
Satisfied Customers: 10915
Experience:  Solicitor with 5+ years experience
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Is there an ombudsman policy for small business loans where

Customer Question

Is there an ombudsman policy for small business loans where RBS/NatWest have sought to engineer a default and raised rates and imposed exit fees in the process of renegotiating an existing loan? I ask because I understand an application to the ombudsman is a step in any pre action protocol. The fully secured loan was originally for £450k.
Submitted: 2 years ago.
Category: Law
Expert:  Ash replied 2 years ago.
Alex Watts :

Hello my name is ***** ***** I will help you with this. Please note that I am a working Solicitor and may be on and offline as I have to attend Court and meet with clients, even at weekends. As such you may not get an instant response when you reply as this is not an ‘on demand’ live service, but rest assured I will be giving your question my immediate attention upon return. There is no need to wait here, you will get an email when I reply.

Alex Watts :

There is the Financial Ombudsman

Alex Watts :

You do not have to be a consumer to use it

Alex Watts :

Their service is free and you can download a complaint form online

Alex Watts :

Their website is:

Alex Watts :

http://www.financial-ombudsman.org.uk/

Alex Watts :

Can I clarify anything for you about this today please?

JACUSTOMER-26r12mzi- :

I know there is an ombudsman service, I have used it before and been generally underwhelmed. The issues here regard NatWest demanding a loan repayment when they knew I could comfortably service the loan but not repay it at short notice. They jacked up the interest rate and introduced exit fees and plenty of other fees besides. They also prevented me from renewing the lease I had that enabled me to meet the loan obligations and came close to causing me to default. I did not default and I will shortly be in a position to clear the outstanding amount. Their actions hindered my ability to repay rather than helping it. I want to know what can be done. I know the ombudsman would be a step in any pre action protocol but I would like a view about the odds from someone who has had experience of this sort of action.

Alex Watts : How have they engineered a default ?
JACUSTOMER-26r12mzi- :

They did not engineer a default but I believe they tried to. As I explained they prevented me from renewing a six year lease I had with a commercial tenant. The rent roll comfortably covered the loan interest. The bank insisted I should try and sell the flats with vacant possession. The difference in income between vacant and occupied is about £70,000 pa. (rent of about £60,000 and council tax about £10,000) LTV was about 40% at the last peak of the property market in 2007 and likely to have never been less than 70% with the market at its lowest ebb. On two occasions my manager offered to put me in touch with someone he knew who would buy the property "not at a high price, but they will act quickly". While this was going on the bank is engaged in what it refers to as "extend and pretend" with other clients. In the extend and pretend scenario the bank extends credit to customers who cannot meet their obligations to cover the interest on the outstanding loans as a means of pretending the loans are not dud. The position tends not to be exacerbated with fees and interest hikes in such circumstances because the banks know they will take a bath. I want to know if there is a general policy about this.

Alex Watts :

Thank you. The Ombudsman will see whether the Bank has acted properly, in accordance with the Rules and any regulations that may apply to this.

Alex Watts :

Therefore the Ombudsman can consider your complaint and will do it quick

Alex Watts :

The Ombudsman can also consider whether they have acted in the spirit of any regulation

Alex Watts :

Therefore as they offer a free and independent service you would do well to look at it

Alex Watts :

Therefore the Ombudsman's policy for a business is no different to any consumer who may have been treated unfairly.

Alex Watts :

Can I clarify anything for you about this today please?

JACUSTOMER-26r12mzi- :

Alex,

JACUSTOMER-26r12mzi- :

Thank you but all this is a statement of the obvious. The bank, having turned down an offer to be repaid in full in July/August 2007 demanded repayment at a month's notice sometime in 2010. This was not possible and they knew it. They then renegotiated the loan jacking up the interest rate and introducing exit fees which they curiously described as fees on "profits". How does increasing the interest rate and introducing exit fees help me to repay them - clearly it is obstructive in that it damages my ability to repay. I want to know if there is precedent for this sort of thing. The ombudsman is typically formulaic, I am looking to make an informed application.

Alex Watts : Potentially they have acted unfairly. If that is the case the ombudsman could find for you.
Alex Watts : If you have been, in effect blackmailed, then the ombudsman can take action.
Alex Watts : You could also do so if they are in breach of section 13 of the sale and supply of goods and services act 1982 by failing to act with all reasonable skill and care.
Alex Watts : Does this help?

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