Since the FCA’s launch of their review into the mis-selling of Interest Rate Hedging Products (IRHPs), banks have been relatively open to settling mis-selling claims relating to actual interest or breakage charges paid under the IRHPs. What the banks have been a lot less willing to do is cover the consequential losses that thousands of customers have suffered as a result of these mis-sold IRHPs. Typically in respect of consequential losses banks are willing to offer only 8% interest on top of any redress offer for direct losses.
More often than not the consequential losses claims can be a lot more substantial than the direct losses caused by the IRHPs and the simple 8% interest often does not come even close to covering a fraction of those.
A question our clients often ask after their bank has dismissed their consequential losses claim under the FCA Review is what they can do next. Often the Financial Ombudsman Service (“FOS”) will not be available route forward, if turnover or employee numbers exceed prescribed thresholds, and additionally FOS are unable to award more than a cap of £150,000. Most consequential losses tend to substantially exceed the FOS limit and hence the only real option for many unhappy bank customers is to go down the litigation route.
Litigation, be that in England or Scotland, is never cheap and always carries risks. At the same time, if the bank is unwilling to negotiate a commercial settlement in respect of the consequential losses then litigation may well be the only option left.
A large consequential losses claim has recently been brought against HSBC by two claimants, Simon and Edward Hackett, in England.
Last year HSBC repaid the Hacketts £1.2 million in respect of funds spent (including interest) under mis-sold swaps. The Hacketts are now seeking damages in relation to consequential losses suffered as a result of paying £930,000 to the bank under the swaps. These consequential losses include....
This claim comes as a number of banks are facing high profile Libor-related civil litigation in the High Court. Guardian Care Homes is pursuing Lloyds for over £8 million in a consequential losses case and Rhino Enterprises, a Leeds storage business, is pursuing Barclays in a £50 million claim arising out of IRHP mis-selling and Libor manipulation.
If you have a consequential losses or if you have any queries arising from this article then please contact our Dispute Resolution team on 0131 226 8200.blog comments powered by Disqus