Bank customers facing litigation - introduction

IBAS Report on Bank Customers in Litigation - This report was compiled from 1200 questionnaires we sent to individuals known to have been involved in litigation in October 1996 - from the completed responses the report was then completed in early 1997.

IBAS Report on Bank Customers in Litigation 

 

Research of Bank Customers in active litigation with the five UK major high street banks was conducted by IBAS. Over the period of four years IBAS monitored progress on cases involved in litigation. Many UK Bank customers have expressed concerns that their initial problems with the bank were compounded further by the use of the legal system. Our research shows that:

43% - have been in litigation in excess of 4 years.

57% - have been in litigation in excess of 2 years.

79% - of actions have been instigated by the banks.

84% - of actions are legally aided.

62% - have changed solicitors three or more times.

81% - of cases relate to a business or late business.

 

Analysis of research:

1200 questionnaires were mailed to past IBAS enquirers in litigation with a bank. The figures were compiled over a three month period from October 1996. We received 764 replies of which 692 were fully completed with all relevant information - these formed the basis of our report.

 

Bank	Percentage
Lloyds	37%
Barclays	30%
Nat West	24%
Midland	06%
RBS	03%

 

Banks involved in UK litigation can be categorized as follows

 

 

UK Banks commence legal actions instead of seeking solutions. In many of these cases the transfer of a bank complaint from the banking system to the legal system merely added further cost to the customers account for payment. Rarely has this worked in the customers favour, despite often well documented and extremely serious complaints being made. The failure of the banking internal complaints system, in some cases to enable a compromise to be made, has been deliberate and the transition from a banking matter to a legal matter has been to the customers disadvantage, but more importantly to the banks advantage, both in time and the ability to charge all recovery costs plus interest to the customers account in a large percentage of the cases. Particularly noticeable is the use of the legal system to prevent the Office of the Banking Ombudsman from continuing to investigate complaints where the bank is obviously at risk from a more detailed investigation taking place.

 

Four Out Of Five Proceedings Instigated By The Bank

 

As the majority of cases involved the bank instigating proceedings (79%) the customers perception of their problems at this stage were often clouded by simplistic reactions - i.e. "I'll have my day in court and my complaints will be properly aired" or "when they realize I am going to defend the action, they will pull out". In reality nothing could be further from the truth. The banks all have their own 'in house' or retained specialist banking lawyers, with instructions to protect the banks position at any cost. Their knowledge of these type of actions will be considerable and they will invariably project a 'hard line' attitude, regardless of the facts.

Banks Spare No Cost On Legal Actions

When the bank issues proceeding they fight with everything available and no cost will be spared in the hope of achieving a swift result. Confronted with this approach the customer has little time to consider how, or indeed if, they can defend the action and it is because of the brash and intimidating approach of the bank that the customer frequently offers no defence at all. The alternative being to act as litigant in person or be represented by a solicitor generally not aware of the banks overall strategies. This gives the bank the perfect opportunity to literally 'rush' an action through court, leaving the customer traumatized and financially even worse off than before. The costs of litigation is not a serious consideration for banks as invariably, in the majority of cases, costs will be met at a later date from the customer's property, or their assets.

 

Deliberate Delaying Tactics By UK Banks

The bank is only presented with a challenge, when the customer defends the proceedings and when faced with this situation, the bank adopts a totally different approach and the agenda changes drastically. The objective is then to delay. We have established that there is an intention to deliberately delay the progress of large numbers of cases by a variety of methods. In particular it is normal practice for the banks to repeatedly revert to the courts for extensions of time, which are invariably granted despite objections. Vital documents are frequently 'lost or destroyed', before the discovery stage and therefore not available to the customers lawyer, or indeed the court. It would appear that perjury is commonplace in affidavits from the banks - with statements being sworn on oath as true, when clearly they are misleading at best, but often not true.

Blatant Abuse Of The UK Legal System

 

Neither is it unusual for vital facts and figures to be presented to the court which are both inaccurate and poorly prepared by the bank, when submitting a claim for possession of the family home. The onus being on the customer alone to prove that the submissions by the bank are not accurate or correct.

This appears to IBAS to be biased in the wrong direction. Surely, it is up to the bank to prove without doubt their position and that the debt they are claiming is owed. This also leads IBAS to question the true cost of UK justice and whether it is denied to those who have limited resources. At the same time the legal system accepts both inaccurate and late affidavits from the banks, without penalty, whilst expecting the opposite from the customer.

 

Trying To Find The Right Lawyer Places The Customer In A Legal Minefield

 

When issued with legal proceedings, many customer enter a legal 'minefield' without the ability to differentiate between legal advisors capabilities. This frequently results in solicitors being instructed without consideration or knowledge of their ability in this extremely specialized field. This can result in total dissatisfaction or loss of the case, due to the instructed solicitor not having the experience or commitment with which to properly brief counsel, or present the case effectively.

Majority Of Customers Unable To Afford Costly Litigation

 

From the survey results, the majority (84%) of cases are legally aided and again the majority have been in litigation more than two years (57%) with the remaining (43%) still in litigation after more than four years.

 

Lawyers & Bankers The Only Winners From Legal Aid

 

The length of time can be directly related to how much time is wasted by the participants - in particular the banks, who have an unlimited purse and no sense of urgency, particularly when it is to the banks advantage both in time and the ability to charge all costs to the customers account.

 

Customers Compromised By System

 

Of the 21% who have been able to commence an action against their bank, those who are legally aided face not only the delaying and time-wasting tactics. If their case looks sound and the bank senses a possible defeat, they will invariably offer a derisory out of court settlement, but only after a number of years have elapsed. Unfortunately, if the customers legal advisors consider the offer reasonable, balanced against future costs to proceed with the action, legal aid may be discharged.

 

Derisory Settlements To Customers

Such settlement offers rarely reflect a realistic, or fair figure and are offered in the knowledge that the easy option may be preferred by the customer's advisors and the legal aid board - the only loser can be the customer. This provides yet further advantage to the banks, who are already using their deep pockets to manipulate the situation to their own advantage. In this situation the customer is left in a hopeless position - with the case stopped from reaching court. The bank can be the only winners in this situation and again justice is not served.

 

Quote from Chief Executive Eddy Weatherill

 

 

 

"At IBAS we have proved that there is an alternative to lengthy UK Litigation and many cases have been lifted from the legal treadmill and resolved by direct and active negotiation through IBAS.

 

 

However, our research has highlighted that there are thousands of people still in the grip of litigation, ignorant of any alternative,

 

with no prospect of knowing whether their lawyers represent their best interests or not.

In recent years we have been able to identify a large number of the potential problem areas and at the same time help many avoid them, leading them to a successful outcome. Our recent initiatives have shown that where the will exists on both sides to reach a compromise IBAS involvement in the negotiation will certainly bring matters to a more favorable and fairer conclusion for the customer".