Posted on Jul 18, 2013 by | 0 Comments
In a number of cases which we have been dealing with recently the issue of loss has been a prominent (and at times heatedly argued) topic of discussion.
In terms of the FCA interest rate swap review process it is worth examining what kinds of loss are subject to the review. In the first instance there are the losses deriving directly from the swap. These come in the form of swap payment and breakage costs.
However it is also important to note the review process will also take in to account losses suffered over and above these. Such losses are called “consequential losses”. What we have found that some clients are not aware of their ability to claim consequential losses as part of the review process, while others have an overly optimistic view of what they can recover.
In order to claim a consequential loss a customer needs to prove:
- The at the miss-selling caused the loss; and
- That the loss was reasonable foreseeable (i.e. a real possibility) at the time of the miss-selling.
Some of these consequential losses will be easily identifiable, for instance overdraft and borrowing charges. The matter gets much trickier when issues of loss of profit arise as customers assert that if it was not for the crippling swap their business would have been able to make new acquisitions, invest in infrastructure or even receive external investment.
It is important to bear in mind that a Bank will not be persuaded or shaken by figures alone. As such any claim for consequential loss should be properly vouched and if possible back up by either an expert report (i.e. from a forensic account) or by comprehensive witnesses statements to the effect that had it not been for the swap, the loss would never have been incurred.