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August 13, 2019

Deloitte, Clyde & Co facing allegations over relationship to Barclays

Jason Schofield is suing two joint administrators at Deloitte, Clare Boardman and Matt Smith, together with the firm’s legal adviser Clyde & Co for £20m, alleging that they failed to act independently in the administration of his business, a Leeds-based storage firm trading as Rhino Enterprises.

Schofield claims the business went into administration as a result of a mis-sold interest rate hedging product (IHRP) from Barclays Bank in 2008. It is worth noting that in 2012 the FCA identified serious failings in the way banks sold IRHPs. A review involving nine banks concluded in 2016, by which time redress letters had been sent to a total of some 18,200 businesses and £2.2bn paid in redress, including more than £500m to deal with consequential losses. Indeed, in 2015, two years after Rhino Enterprises went into administration, Schofield recovered the business and sued Barclays for £50m. The bank settled before the case came to court.

City AM reports that Schofield claims to have encouraged Deloitte itself, as administrator, to pursue legal action against Barclays but that it failed to do so because of the relationship it enjoyed with the bank on its preferred panel for insolvency work.

The newspaper quotes Schofield’s claim as saying: “The informal control is such that, where they are appointed administrators over a company with a serious and substantial claim against Barclays, members of Deloitte were either contracted not to litigate against Barclays or could not pursue the same without fear or favour and/or with the independence required.”

Deloitte had appointed Clyde & Co to review the merits of a mis-selling claim. Schofield suggests that the law firm itself was also conflicted, having been an adviser to Barclays on a loan facility to Enstar, a Bermuda-based insurance provider. 

Deloitte has not commented on the claim while City AM quotes a spokesperson for Clyde & Co as calling it ‘without foundation’ and adding that the law firm ‘refute the assertions in their entirety’ before concluding: “It would be inappropriate to comment further at this time.”

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