Independent Banking Advisory Service
Established in 1992
UK Bank Customer's Class Actions and UK Bank litigation in 2014
IBAS is now in it's 25th year helping/guiding those with UK Business Banking disputes and Director's Personal Guarantee business debt claims - IBAS is the only UK non profit organization which provides business banking customers with specialist business banking assistance and specialist business banking guidance and also IBAS specialist business banking investigations.
On 7th November 2014 we wrote:
Currently, there is a great deal of emphasis and PR on promoting 'collective litigation' against banks such as Royal Bank of Scotland and using a 'class action'. It is not a new idea. It was seriously considered when large amounts of UK ATM cash point transactions were being disputed in 1992 onwards but there was no viable method/legal assistance or funding available to promote a 'class action' at that time.
Class-action litigation, known as group-action litigation is where a group of people 'team up' to bring an action against normally a large company. Class actions can be brought for a number of reasons. Generally, each member of the group will have the same potential claim against the other party so that the courts will allow the action to be brought as a group. Class actions are encouraged by the court if the individuals involved have a claim based on the same facts. As can be seen in situations where a group of shareholders bring a claim against the directors of a company or when the employees of a company bring a claim against the employer. It is only when the individuals are bringing almost entirely the same claim, or element of the same claim that a group action will be allowed by the courts.
Class actions have worked well in the USA where there is an established litigation 'culture' and lawyers actively 'muster' and advertise for specific claims to litigate. There is no direct equivalent in English law to that of US law, which enables one or a group of 'parties' to sue as being a representative of a larger class which may include others yet to be identified.
The significant legal and cultural differences between US and English litigation prevented class actions in England until very recently where banks are concerned. That's because the incentive for claimants' lawyers in England was limited and only by a conditional fee agreement can an uplift fee be applied if the claim is successful. There are also limitations to even a conditional uplift fee and English Judges are aware that US class actions are heavily lawyer 'driven' in an 'ambulance chasing' culture, so their aim is to control legal costs using costs-capping orders as necessary.
Also, in England exemplary damages (often termed punitive damages) are rarely given whereas high levels of punitive damages do occur in the US because such claims are heard in front of a Jury. Jury trials for Class actions do not occur in England.
But, changes in English litigation culture began with the Enterprise Act 2002. The introduction of that Act has recently enabled claims to be put before the Competition Appeals Tribunal by "specified bodies" on behalf of two or more consumers who 'have suffered damage'.
Unmeritorious or frivolous claims will not attract funding because they do not pass the merits tests to obtain funding through the Legal Services Commission or because being 'borderline' (more likely to lose) they will not provide fees for claimant lawyers who will reject such cases for a conditional fee agreement.
It is true that all the bigger UK banks have acted in destroying businesses, using tactics which in any other business would be immediately seen as unfair and monopolistic (as in SWAPS which were sold by banks to businesses and deemed by the FCA after many years of complaints as being 'miss sold'). It is also true that due to it's share of the UK business banking market that Royal Bank of Scotland 'sold' a large number of SWAPS and that RBS's Global Restructuring Group did take advantage of many businesses and 'plundered' them to profit the bank.
The background to all of this is that successive Governments denied banking consumers proper regulation because they were 'blindsided' and manipulated by the big banks promising even larger financial service profits, without anyone questioning how those profits were being gained. More importantly, banks were allowed to exploit and destroy businesses and strip their assets without any protection for those being plundered.
During the last recession in the late 1980's to the early 1990's. the insolvency profession and the big banks worked together to asset strip businesses and their owners. Bank debt recovery was then and is now a very profitable business for banks and of course for insolvency professionals.
However, banks 'ripping off their customers' is not a new phenomenon nor has it been limited to the last decade. The same or similar tactics have been in use for longer than the last two decades and beyond that. Banks were able to exploit the legal system for their benefit and derailed many legal cases by using tactics which were 'outside' legality. They were able to do so by using the 'blanket of protection' provided by successive Governments, which extended into contentious banking litigation. That was possible because such litigation (by the customer) was considered as being against the 'public' interest (i.e. banks needed protecting at all cost from their customers) and therefore any tactic used to discredit, cheat or manufacture evidence to prevent success of customer litigations were deemed 'necessary'.
It is only quite recently that Prime Minister David Cameron said that the Government would no longer provide a 'blanket of protection' which had been provided to the big banks. Government protection had enabled the big banks to cheat customers both outside the UK legal system and from inside it. As even from 'inside' the UK legal system the banks were able to fully exploit the 'system' by 'adapting' the protection they then enjoyed from Government - using a variety of strategies.
Another factor which has prevented bank accountability and allowed profiteering from dishonesty during the last two recessions was that the banks have operated a very large and organized lobby group - the British Bankers Organisation which has infiltrated Government. The BBA states their position as: “The BBA is the UK’s leading association for the banking sector, representing the interests of more than 240 member organisations with a worldwide presence in 180 countries. Our membership brings together banks of all shapes and sizes, including retail banks, wholesale institutions, challenger banks and private banks.” BBA was very influential with Government as a lobby group until the LIBOR 'rigging' debate caused concern. See: https://www.bba.org.uk/
But, as Lawrence Tomlinson recently stated: 'Lobby groups, such as the British Bankers Association, also have their foot through the door in many parts of government despite their part in the LIBOR scandal. Having taken control of many data sources, and funded government programmes they are, to an extent, deemed indispensible. The conflicts of interest are plainly apparent, and the number of lobbyists and force they have, can hardly be matched by the business community'.
So, it appears that even very recently and despite the LIBOR scandal the BBA has retained influence on Government.
Whilst on the banking consumer and business banking disputes area matters are not so organized or properly funded. Many of the 'help' organizations that do exist whether debt help or business help are infiltrated or run by bankers exerting influence or are 'cultivated' by bank sponsorship, charity funding, personnel placement and so on.
So, will lawyers fix the banking system by using 'class actions' and force banks to operate in an accountable way - so that their customer's can grow their business safely with some degree of trust? Most of us can guess that lawyers will not fix what is already 'broken'. Most would guess that the discredited banking system will remain under a 'cloud' for a long time to come whilst the FCA attempts to oversee other banking scams and 'plasters over the cracks'.
But, what is now certain is that lawyer's fee income will grow and lawyer groups will expand on the back of mass banking litigations, which may well be unpalatable for many. However, it is something which the banks have brought upon themselves from their 20 plus years of miss conduct and profiteering from what has been a captive market.
There will be many UK business banking cases in dispute with their bank which will not 'fit' into any class action and which cannot fund part of such an action or benefit from a 'class action' and IBAS will continue to provide professional and knowledgeable advice with direct assistance (as we have done for 22 years) to those under direct pressure from a bank demand on their business or their bank claiming or 'calling' on Director's Personal Guarantees for debt claims from a previous business.
IBAS provides it's services at far less cost than lawyers or the ex bankers and insolvency professionals - all of whom are now chasing the 'ambulances' and charging large fees to fund profit driven businesses. Those businesses will be inflicting even more pain on company directors with personal guarantees for businesses that have failed - who are now facing a bank debt demand on their personal guarantees. - by Eddy Weatherill, chief executive of IBAS, Independent Banking Advisory Service
7th November 2014
Independent Banking Advisory Service (IBAS) - IBAS launched in 1992 as a specialist unincorporated business banking membership organization assisting bank customers with UK business banking account/loan account/mortgage account and security disputes and business banking debt disputes. Our bank analysis and investigation of business bank loans, bank accounts, banking contracts, business banking account facilities and banking debt recovery information has been instrumental in our member's success.
Independent Banking Advisory Service
Tel : 01487 843444 or email IBAS