Does your bank have better lawyers than you do?

In the current financial and economic climate many people have suffered at the hands of their bank. Many feel aggrieved at the way their bank has treated them. There are many groups which are a focus of concern at the way banks behave and there is no shortage of forums which allow bank customers to voice their dissatisfaction at bad bank behavior.

Despite all the bluster, all the focus groups and all the blogs, ultimately the answer to your problem on the day will boil down to who is right and who is wrong according to the law. And there is the beginning of a problem.

Despite the fact that we have centuries of law which generally favours our institutions and banks in particular, the law and Judges are increasingly prepared to accept that banks behave badly and there is now more likelihood that a court will find in favour of the customer than ever before. This is a not a wholesale change in the legal landscape but it is at least a moderate change in prevailing climate.

In order to make the most of your chances you need a lawyer who can best exploit the law, the procedural rules and the prevailing ‘climate’.

Large law firms together will account for most of the legal expertise in the banking field. Those same law firms will always derive significant income from acting for banks. Often it is expressly agreed between an individual bank and a law firm that if the law firm agrees to act for the bank then it will decline to act against not only that bank but clearing banks as a whole.

This does make sense from the bank’s perspective but severely limits the pool of expertise that you can draw on in fighting the bank.

I deal with banking disputes for clients who are not banks. Often banks have behaved badly towards a business and push it over the edge because they know that they have the comfort of a personal guarantee. So it becomes your problem and not theirs. We cannot always waive a magic wand and sometimes the bank does in fact have the upper hand according to the law. However this is certainly not always the case, far from it, and I have selected a team of people that can assist you, based to the following criteria :

1.     Established expertise

2.     Knowledge of the inside workings of banks

3.     Knowledge of banking documentation

4.     No conflicts of interest. In other words, no-one acts regularly for banks in general or any particular bank and is not therefore conflicted in acting against banks.

Therefore we like to think that we can offer the same expertise when acting against banks that they have routinely available in making claims against you.

Email me for advice:  Patrick.selley@keystonelaw.co.uk

Www.patrickselley.com

Is my bank retaliating?

 

My Advice in the Financial Times 
August 22nd 2014 

                                                                         

I run a logistics company and recently claimed compensation from my bank through the Financial Conduct Authority (FCA) as I strongly believe we were a victim of mis-selling interest rate swaps. I am extremely concerned because we have since been informed by the bank that our overdraft has been considerably reduced. This was obviously in separate correspondence, and no mention is made of the compensation we are seeking, but surely it is not a coincidence. Is there anything we can do to challenge the bank’s behaviour?

 

 

Answer:

 

Your suspicions could be right. If your complaint about mis-selling is the only reason that the bank has reduced your overdraft you may have a remedy. Overdrafts are “on demand” facilities. This means that the bank has a wide power to call in or reduce an overdraft at any time.
The bank can exercise this power for any commercial reason even if it is not in your interest to do so. However there is an implied term in your contract with the bank that the power to call in or reduce the overdraft will not be exercised capriciously or irrationally.

If the decision benefits the bank commercially that would be sufficient reason. If, however, the only reason was because of your complaint to the FCA, this would be irrational or capricious and accordingly in breach of your contract; however, you would need to prove this. Start by asking the bank to state its reasons in writing. Once you have this, make a Data Protection Act request accompanied by the correct fee. You may then begin to ascertain if there was any other rational reason for the reduction of your overdraft.
If the bank pays you basic compensation for the swap mis-sale it is important that you do not accept this as final compensation and that you reserve your right to claim any consequential losses for the unnecessary expense your business incurred. Finally, if you have given a personal guarantee for the overdraft take specialist advice at an early stage.

patrickselley.com 

patrick.selley@keystonelaw.co.uk

 

http://www.ft.com/cms/s/0/11b8b254-1bbf-11e4-9db1-00144feabdc0.html#axzz3D5UeHu3t 

Personal Guarantee liability for Company Directors following an increase in the company’s credit limit.

Typical Situation

As a company director you may have given a guarantee to the Company’s suppliers.  Typically supply agreements have a credit limit at any given time. Questions arise as to the effect of in increase in the underlying credit limit upon the personal guarantee. Have you been asked to pay far more under the guarantee than you ever thought you were liable for? Does an increase in the credit limit discharge your liability or not ?

General Principle
Variations to the contract between the supplier or lender made without the consent of the guarantor after the guarantee has been given can operate to discharge the guarantee. Holme v Brunskill (1878) 3 QBD 495). For this reason nearly all bank guarantees will have carefully drafted clauses designed to avoid this happening. However personal guarantees in supplier contracts are frequently drafted less carefully and leave the door open to arguments about discharge of liability where the underlying contract has been changed.


Variation that can discharge guarantee liability

The Court of Appeal decision in the case  of Triodos Bank NV v. Dobbs  [2005] EWCA Civ 630 is authority for the proposition that a variation to the original contract such as the granting of increased credit, will discharge the guarantor from liability if the variation on its true construction in fact amounts to a contract that was different to that contemplated by the parties, including the guarantor, at the time the original guarantee was given. In this case the guarantor can be discharged even if, as a director of the company, he consented to the variation.

Variations that will not discharge liability

In National Merchant Buying Society Ltd v Bellamy and Mallett [2013] EWCA Civ 452  the Claimant was an industrial and provident society which negotiated bulk purchasing agreements with suppliers for the benefit of its members. Its members were companies in the construction industry. Mr. Mallett was a shareholder and joint director of his company which was a member. The company had a credit limit with the Claimant of £200,000 but appeared to be in financial difficulties. In 2002 the Claimant therefore asked Mr. Mallett to provide a written personal guarantee under which guaranteed payment of "all sums which are now or may hereafter become owing" to the Claimant by the company. In 2006 Mr. Mallett resigned as a director but his guarantee remained in place. The company’s credit limit was increased to £400,000 and then to £700,000. The company became insolvent in 2008 owing the Cliamant £330,000. The Claimant obtained part of that sum from its credit insurers and sought payment Mr. Mallet under the terms of the guarantee.

Mr. Mallett argued that the guarantee had been given on the basis of a contract with a credit limit of £200,000, which therefore limited liability on the guarantee to £200,000. As he had not consented to the increase in the credit limit his liability under the guarantee was therefore discharged.
The Court of Appeal decided that the guarantee was not linked to a specific contract but was a guarantee of all monies that would become due between the Claimant and the company. As the course of dealing between the claimant and the company was in the contemplation of the parties when the guarantee was given the liability on the personal guarantee was not discharged and Mr. Mallett had to pay.

The Court said :

“ The relevant question – in this as in every case – is ‘what is the nature of the guarantee obligation that the guarantor has assumed?’ The answer to the question turns on the interpretation of the guarantee, as to which there are no special rules”

Conclusion

1.    If you are resigning your position as director of a company it is always best to remember that you need to make provision to deal with your potential guarantee liability at the point of resignation.

2.    If however you are being pursued under the terms of an earlier personal guarantee then you will need to :

a.    Check the terms of the guarantee itself
b.    Check the terms of the underlying contract
c.    Find out what happened since you resigned and
d.    Take advice.


Patrick Selley
17th June 2014

www.patrickselley.com
email: patrick.selley@keystonelaw.co.uk

SMEs Losing Out On Mis-Selling Compensation

SMEs losing out on mis-selling compensation

An investigation by the Times suggests that banks are failing to pay out sufficient compensation to SMEs over the mis-selling of interest rate hedges. The paper says it has uncovered a “flawed but legal” mechanism in the regulator's scheme that allows banks to cut compensation awards to their customers by hundreds of thousands of pounds potentially. A spokesman for the FCA said: "Our aim is to secure fair and reasonable redress for those affected. We have kept a close eye on decisions as they have been made to check that fair and reasonable redress is being offered. We will continue to monitor the process as it reaches its conclusion. A commentator states that banks are making "nonsensical" decisions that were "unfair" for small businesses, especially those that could not afford to take legal action.

The Times, Page: 37, 42, 43

Lifted from Keystone daily news update

Patrick Selley
Consultant Solicitor
0207 152 6550

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Weathering the Storm...

Do Banks Have the Best Lawyers?

In the current financial and economic climate many people have suffered at the hands of their bank. Many feel aggrieved at the way their bank has treated them. There are many groups which are a focus of concern at the way banks behave and there is no shortage of forums which allow bank customers to voice their dissatisfaction at bad bank behavior.

Despite all the bluster, all the focus groups and all the blogs, ultimately the answer to your problem on the day will boil down to who is right and who is wrong according to the law. And there is the beginning of a problem.

Despite the fact that we have centuries of law which generally favours our institutions and banks in particular, the law and Judges are increasingly prepared to accept that banks behave badly and there is now more likelihood that a court will find in favour of the customer than ever before. This is a not a wholesale change in the legal landscape but it is at least a moderate change in prevailing climate.

In order to make the most of your chances you need a lawyer who can best exploit the law, the procedural rules and the prevailing ‘climate’.

Large law firms together will account for most of the legal expertise in the banking field. Those same law firms will always derive significant income from acting for banks. Often it is expressly agreed between an individual bank and a law firm that if the law firm agrees to act for the bank then it will decline to act against not only that bank but clearing banks as a whole.

This does make sense from the bank’s perspective but severely limits the pool of expertise that you can draw on in fighting the bank.

I deal with banking disputes for clients who are not banks. Often banks have behaved badly towards a business and push it over the edge because they know that they have the comfort of a personal guarantee. So it becomes your problem and not theirs. We cannot always waive a magic wand and sometimes the bank does in fact have the upper hand according to the law. However this is certainly not always the case, far from it, and I have selected a team of people that can assist you, based to the following criteria :

1.     Established expertise

2.     Knowledge of the inside workings of banks

3.     Knowledge of banking documentation

4.     No conflicts of interest. In other words, no-one acts regularly for banks in general or any particular bank and is not therefore conflicted in acting against banks.

Therefore we like to think that we can offer the same expertise when acting against banks that they have routinely available in making claims against you.

Email me: Patrick.selley@keystonelaw.co.uk

Www.patrickselley.com