29 August 2013 by

Barclays’ call for cash echoes Swap mis-selling victims’ calls for redress

In January 2013 the Financial Conduct Authority (FCA) announced the results of its Pilot Redress Scheme. They concluded that there were “serious failings” in the banks’ sales practices, and that mis-selling occurred in over 90% of cases where Interest Rate Swaps were sold to small and medium sized businesses. The FCA also said that, in addition to receiving refunds of monthly payments and exit fees resulting from the Swaps, the Scheme would also provide for the victims to be able to recover any further financial loss that has been caused by mis-sale. This is known as “consequential loss”.

Since the FCA’s announcements, the issue of consequential loss has presented a real conundrum for all concerned, not least for the Banks. This was highlighted in Barclays’ recent quarterly results, which, amongst other things, announced that the bank will be issuing a cash-call to its shareholders to strengthen their capital reserves in preparation for difficult times ahead.

How that cash will be allocated is of great interest to the victims of Swap mis-selling, and the detail can be found in the official Barclays Plc Results Announcement released on 30 July 2013. Barclays has been entirely non-committal on how they plan to deal with consequential loss. In particular they state that:

“The provision in respect of interest rate hedging product redress has been increased by £650m, bringing the cumulative expense recognised to £1.5bn… It is expected that this provision will be sufficient to cover the full cost of completing the redress, however no provision has been recognised in relation to…incremental consequential loss claims from customers classified as non-sophisticated. These will be monitored and future provisions recognised to the extent an obligation resulting in a probable outflow is identified”.

Whilst the increase in the overall reserve for Swap redress is encouraging, consequential loss remains largely unaccounted for. The bank appears to have delayed addressing the issue, which is of great concern in light of the potential extent of their liability: in many cases the amounts of money relating to consequential loss are greater than the refunds of the monthly payments and exit fees.

There is likely to be speculation over the reason for Barclays’ omission to deal with consequential loss now, much of which will centre on their desire to protect the perception of financial health at the bank in future results announcements, and the bank’s desire to pacify the increasingly tense relationship with its shareholders.

This announcement may also indicate a fundamental unwillingness on Barclays’ part to engage with reasonable consequential loss claims, and may suggest that the mechanics of the Scheme will have to be adjusted if it is going to provide the satisfactory redress to which thousands of the bank’s customers are entitled.

For customers to have the best chance of recovering their legitimate consequential loss within the Scheme, obtaining legal advice and presenting their case as accurately and comprehensively as possible is essential. In addition, with the statutory limitation period of 6 years fast approaching on many of these claims, it is also important that people take advice quickly so that their right to take the claim to court is protected, should the banks remain equivocal on the issue of consequential loss.

For more information, and to discuss your claim today, please contact one of the team and arrange a free 30 minute consultation.

Tom Lawrence
Marc Thurlow
Simon Bishop

13 August 2013 by

When Artificial becomes Actual

It might sound like a silly question, but when is a father not a father? The Human Fertilisation and Embryology Act 2008 provides that if a child is conceived by means of artificial insemination (AI) using donor sperm, provided the mother is married at the time of the insemination and her husband consents to the treatment, he will be the child’s father and afforded all the rights and responsibilities of a legal parent.

15 August 2013 by

It’s all a Matter of Trust

Wills are something to which we would all prefer to give little thought. The question of who to appoint as executors and trustees in a Will even less so.

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