A long-running legal claim against one of Britain’s biggest banks over allegations that its business customers unnecessarily paid hundreds of millions of pounds in fees and interest will be expanded this week with the addition of hundreds of new claimants.

Sky News has learnt that RGL Management, which is managing the legal action against Clydesdale Bank, a subsidiary of Virgin Money, will announce on Tuesday that it has added 436 claims on behalf of more than 250 SME customers.

That will take the total number of claims and SMEs in the group action to more than 1300 and 845 respectively.

The action has been in progress since 2017, and has involved the recruitment of a new litigation funder – Bench Walk Advisers – to commit the £15m required to pursue the claim against Clydesdale and its former owner, National Australia Bank.

The litigation is focused on tailored business loans (TBLs) that were sold to customers between 2001 and 2012, with previous estimates suggesting that the aggregate value of the claim would run to several hundred million pounds.

Virgin Money has not made any provision in its accounts for the claim, and has dismissed the prospect of paying out a substantial sum.

A Virgin Money spokesman said: “There is absolutely no merit in the allegations made in RGL’s claims, which involves four live claimants.

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“Their case is weak and we remain confident of defending our position.”

In total, approximately 6,500 customers were sold the TBLs, meaning the majority have yet to sign up to the claim.

James Hayward, RGL Management’s chief executive, said: “With this significant new wave of claims, the largest to date, we remain supremely confident in the strength of our case.

“There is irrefutable evidence which proves the bank’s unlawful treatment of its fixed-rate loan customers and we are well on the way to securing them the compensation they deserve, which is in the hundreds of millions of pounds.”

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