Surge in mis-selling claims
Small businesses are rushing to file mis-selling claims against their banks before April, when the Jackson reforms make conditional fee agreements a less viable option.
Campaigning organisation Bully Banks, which has been co-ordinating information and campaigns on allegedly mis-sold interest rate hedging products, has urged its 750 members to begin claims. Around 28,000 such products were potentially mis-sold by banks to businesses.
Bully Banks chairman Jeremy Roe said: ‘The Jackson reforms will have an effect on CFAs and the after-the-event insurance arrangements claimants can make. That effect will be quite profound.’
To facilitate those claims, this week the group announced a deal for members, negotiated with national firm Russell Jones & Walker (RJW), to take interest rate swap claims on a 100% CFA basis. RJW has had 60 fresh enquiries from Bully Banks members that it expects to take on since the deal was announced, more than four times the number of cases the firm had previously dealt with.
RJW’s head of group litigation and commercial services, Fraser Whitehead, told the Gazette that while claims could not be run as an actual group action, commonalities would allow RJW to manage them ‘like’ a group action. ‘Although each case is fact-specific, they can be co-ordinated,’ he said.
Comments
Group Litigation Orders
Hats off to RJW for having the national presence and resources to exclusively secure and service Bully-Banks' many members. RJW may find in the months to come, as we have, that there is minimal true commonality in these cases and that ultimately these cases and the attention required on each is ideally individualised as opposed to dealt with en masse.
LEXLAW considered, with leading counsel, mounting a Group Litigation Order application on these cases and considered it would be highly problematic inter alia due to a lack of commonality in claims, a high number of variables in facts and a wide number of potential defendants. It is noted that Edwin Coe reportedly considered a GLO some months ago also although have not yet presented an application nor registered an interest with the Law Society’s Multi Party Action Information Service as PD 19B of the CPR requires as a preliminary step.
The variables in these cases are too numerous. An example variable is that the bank customer would have been sold (and presented) one of a wide range of derivatives, the notional value, term and size of the hedging compared to the underlying loan impacts on whether the product can be truly described as suitable or not. Within this example variable alone there are literally hundreds of variables.
There are a variety of obstacles in the path of claimants dependant on the way in which (and if) they were incorporated as well as their classification, past experience and knowledge. Further whether their are administrators/LPA receivers involved now or historically. Often the damage has been done and the control over the incorporated business has passed. If the company has administrators in position they need to be approached to obtain assignment over a right of action. Another issue which arises is past complaints may have resulted in settlements with the bank which need to be carefully vitiated (if possible).
Variables also exist in the approach that a customer will wish to adopt against their Bank. Some will be very ready to fight and/or terminate or have already terminated relationships. Other customers will be either fearful of their Bank's response in potentially adversely varying or foreclosing existing lending facilities (although the threat of this has been reduced post the first FSA press release of 29 June 2012). Others still have excellent relationships with the retail arm of their bank and have been told/believe that if they litigate there will be no adverse impact on their relationship. The latter is quite rare.
We came to a conclusion, prior to the first FSA Press Release on 29 June that each case ought to be treated as an individual case - indeed for some clients it is absolutely best not to litigate. We charge clients a minimal consultation fee in order to review all papers, meet them and provide professional legal advice and suggest the best strategy through the legal and alternate Bank/FSA redress minefield.
M Ali Akram, LEXLAW Solicitors