Clydesdale pursued over its role in sunken Arck

Four hundred investors in an unlicensed, and failed, property investment scheme in the UK are seeking £20 million in compensation from Clydesdale Bank. Lawyers for the investors assert that the bank failed in its duty to vet transfers out of a segregated account.

Arck LLP collapsed at the end of 2011. In March, police in Nottingham charged two managers of a related company, HD Administrators LLP, with fraud by false representation and with money laundering.

On the same day, the Financial Services Authority effectively withdrew the licence of HP Administrators to operate, on the grounds that it was failing. It cited the risk of loss to consumers and failure to adequately protect client's money.

By that stage, it appears the money was already lost, with the funds allegedly pilfered from an account held with Yorkshire Bank.

Yorkshire Bank is one of the trading names of Clydesdale Bank. Clydesdale is a subsidiary of the National Australia Bank.

Law firm Regulatory Legal Solicitors have submitted 400 complaints against Clydesdale Bank with the Financial Ombudsman Service relating to the alleged mismanagement of client funds by the Bank in an Arck account.

Michael Cotter, a Lawyer with Regulatory Legal, said "the bank represented that they would manage the money in a segregated account. Carl Ashley a partner of the bank confirmed as such by way of a signed mandate. We allege that they did not operate the account in this manner."

Cotter said that a segregated account was "a term of art" and any money in an account of this type could is commonly kept away from the operational monies of the business.

One document produced by Yorkshire Bank in connection with marketing by HD Administrators of the Arck scheme confirmed the Yorkshire Bank would hold investors monies in a segregated client account.

Clydesdale Bank declined to comment on the grounds it would be "inappropriate".