National Australian Bank’s culture has again come under fire, this time over the alleged mis-selling of loans to small businesses through it’s UK subsidiary Clydesdale Bank.

According to a report by the UK Parliament Treasury Committee, the bank failed to explain in “plain English” the risks and costs to small businesses of complicated loans known as ‘Tailored Business Loans’ (TBLs).

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It comes shortly after a leaked document showed NAB had been dealing with multiple instances of bad behaviour in its financial advice arm, resulting in the sacking of a number of advisers.

The UK Treasury Committee said: “We have received evidence suggesting that Clydesdale Bank mis-sold Tailored Business Loans.

“Clydesdale has itself admitted that its terms and conditions letters would not pass a plain English test, and that its TBL customers could not reasonably have anticipated the high levels of potential break costs to which they had exposed themselves.

“Many small businesses indeed did not grasp their exposure to such high break costs, nor could they reasonably have been expected to do so.”

Clydesdale’s failure to communicate the costs to customers was particularly serious because TBLs are not regulated, something of which the committee said the bank was fully aware.

“The use of TBLs has left regulators powerless to enforce compensation for customers to whom products were mis-sold, as they have done with IRHPs [interest rate hedging products],” it said.

The news that NAB’s UK business has behaved badly – and possibly unscrupulously – has brought increased pressure on the bank to fix its culture.