With The FCA review now in full flow, and 96% of people getting confirmations that they have been missold, were the Banks and The FCA correct in saying you do not need a solicitor?
No, and it is dangerous to try and deal with matters on your own.
The reason is not:
- Because the banks cannot be trusted to reach the right conclusion
- That lawyers just trying to get some cash, or
- That what will be will be.
The reason you need to get expert advice from a banking litigation solicitor (not just an interest rate swap solicitor or swaps expert that has cropped up, but someone experience in banking and financial services litigation) is that if you do not issue proceedings within 6 years of the date of your missold product you will be time-barred from issuing a claim and have no leverage in negotiation against the bank.
The banks know that most of the products were sold late 2007 early 2008, most actually between April and May 2008. I dare say that the “delay” in reaching a redress offer under The FCA review scheme might even be linked to pushing people past the limitation date for the purposes of litigation. The Limitation Act 1980 requires claims to be issued within 6 years from the date of breach, which for rate swap claims will be on the day they were sold!
Let’s look an example:
- Bank Presentation 14th April 2008
- Trade Phone Call 16th April 2008
- Confirmation Fax 17th April 2008
As your claim is likely to be one for misrepresentation or negligent/fraudulent misstatement by the Bank in the Presentation, the Limitation Period for that claim would expire on 13th April 2014.
Your other claims will likely be breach of contract and negligence and a breach of statutory duties if you are an individual or partnership. These would be 6 years from the trade phone call as that is when the “contract” is made. This means your limitation date is 15th April 2014.
How to Avoid the Limitation Time Bar
There are only 2 ways which the limitation period can be avoided; by agreement or by issuing a claim.
An agreement is typically called a Standstill Agreement. The bank is basically agreeing not to raise any issues of limitation in their defence. I find that most banks are happy to enter into these agreements, but I have come across some times where they have refused (seems to depend on the Bank and the specific law firm dealing with the matter).
You can agree a timescale in the Standstill Agreement of any period.
Once the review is concluded, if litigation needs to be commenced, a claim can be issued.
The second option is to issue proceeding. I would suggest first issuing a claim form without particulars of claim, which gives you an extra 3 months and thereafter agree a stay with the Bank to avoid them having to file and documents.
I would prefer the Court route, as it keeps pressure on under the FCA Review, and gives you more leverage in the negotiation that is the assessment of consequential losses under the Review.
Of course, whether you issue proceedings depends on the strength of your case and so you really need legal advice before you do anything.
About Steven Mather
Steven is Dispute Resolution Partner at Josiah Hincks and specialising in Commercial Litigation. He has substantial experience in Banking & Financial Services Litigation, including Interest Rate Hedging Products (Rate Swaps). Contact him on smather@josiahhincks.co.uk or 01530 835 041.
