I agree that no bank is ever under a duty to lend, however they are duty bound to comply with the 2009 Bank Lending Code which offers very substantial amounts of protection to businesses who are facing financial difficulty.
The Code requires them to support a rescue package if they believe one will work. They did give the rescue package, two years too late.
The wording of the Code creates a duty. They are duty bound to attend to the "finance application" with care and skill, and act in a timely manner. If they had acted as indeed they did, in 2011, then in 2010 they would have arrived at the same decision that they arrived at in November 2011. ie they advanced the loan.
Thus the allegation is not one of "they are duty bound to lend" as they are not duty bound.
I have issued proceedings regarding the 2010 application for finance and the bank initially agreed to mediate a settlement, then they realised that the future losses were for several Millions, then they have issued a Strike Out Application, to be heard in the near future.
In their Skeleton Argument they correctly identify the two key issues,
1. Was there a duty of care to attend to the 2010 Application for finance, and
2. Would the bank have advanced the funds in 2010 if they had attended to the application with the same care as they afforded the successful 2011 application when at a time when the business was all but insolvent.
The Lending code is very detailed regarding the standards that the bank are expected to engage, and the FCA confirm that they require all banks to fully comply with every aspect of the code, and to act with due care and skill.
Your comments please.
Is there any case law concerning Guarantees relating to the bank increasing the risk to the customer?