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Banking negligence has always been an issue, however, the question of how to sue a bank for negligence, mis-selling or fraud would not have even been considered a few years ago… but that was before the scandals of PPI, interest rate swap mis selling, LIBOR and FOREX manipulation, and prosecutions for money-laundering and lax internal controls.

Over the last ten years we’ve seen the major international clearing banks and investment banks targeted by the Securities and Exchange Commission, the FSA (& FCA) and numerous law enforcement bodies in Europe and the USA.

As bank customers (both corporate and private) have learnt of such wrongdoing, many of the public prosecutions have been followed by civil actions designed to seek financial redress for the individuals and businesses harmed by these nefarious practices of banking negligence.

With the recent changes to the UK competition class action regulations (October 2015) it is safe to assume that even more people will be able to recover any losses caused by poor behaviour of the banks. Having said that, the barriers to banking litigation are still high, both in terms of evidence and also the likely legal costs.

Pursuing a commercial dispute through the UK courts can be an expensive and time-consuming exercise, and the question of how to sue a bank is really only something to consider where the losses have been high and the likely costs are therefore proportionate.

Whether your business has been hit by fraud (which your bank should have identified and prevented) or you’ve been the victim of interest rate swap mis selling, you will need to be able to show the damage that this has caused your business. The UK courts do not look favourably on US TV-show style damages claims – being a victim of crime is not the same as winning the lottery! The judicial attitude is one of rectifying wrongs and not disproportionately enriching victims.

When there is a clear case of banking negligence and the bank has failed to offer adequate compensation via the usual routes (complaints procedure and ombudsman) then sometimes banking litigation is the only viable route to redress. In this scenario it is important to have a clear strategy for taking on an extremely large and well-funded entity that is no stranger to litigation.

There are several aspects of banking litigation to consider:

  • Use expert evidence to prove losses. For example, use a forensic accountant
  • Recruit a legal team with the experience and gravitas to face down the banks’ lawyers
  • Ensure funding is able to see the case to conclusion
  • Obtain insurance to protect your position should the case fail and the court award costs against you

Mistakes are often made on each (or all) of the above steps, and this is because on one side there is an experienced and rich litigator and on the other side a business or person with far less experience of the pitfalls of litigation. This is even true when claimants recruit a lawyer to work on their behalf – there are thousands of lawyers in the UK, but very few truly know how to sue a bank successfully. If the lawyer does have this experience, there is no guarantee that they will be able to advise on how to fund or insure the claim – they may be more interested in having the client foot the bill directly.

Anyone considering making claim for banking negligence should seek professional advice that includes calculating damages, recruiting the right legal team and getting the best funding and insurance to pursue the claim effectively. Only when all these points are addressed are you giving yourself the best chance of success in what’s an inherently unfair fight.

Annecto Legal exists to help individuals and businesses manage the financial risks of commercial disputes. Because litigation is not something people do every day, we lend our experience and expertise to claimants in order to even the playing field. If you are considering litigation, take advantage of our free consultation. If we are engaged to assist, we work on a fee on success basis – typically charging clients just 2% of recovered damages.