Client's Say

Good to hear from happy clients:

Date: 21 June 2013

"I have used Mr Selleys services for the past 18 months on several very difficult legal matters, especially with regards to personal guarantees. He has been a tremendous help to me and he has been an absolute pleasure to deal with and I could not recommend him highly enough.

After owning many well established businesses for the past 40 years, and therefore having had the need to use many different solicitors for different legal matters over the period. I can say the service and professionalism I have had from Mr Selley, and the advice he has given me during the period have been without question the best I have ever seen."


Michael Basso
Chairman of Pan World brands/I Love cosmetics Limited/Worldwide Golf Limited

Email Patrick for a legal opinion: patrick.selley@keystonelaw.co.uk

Do Banks have the best lawyers ? How do I level the playing field ?

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

 

My bank has called in its loan - Financial Times 26 April 2013

By Patrick Selley for: FT - Fri April 26, 2013

Two years ago I took out a business loan. My business has been repaying it since then, but I made underpayments for three months due to cash-flow difficulties. When I spoke to my bank about these, I was told that there was no problem and it even increased our overdraft limit. The bank has now said it is calling in the loan and using a personal guarantee that would place me in a lot of difficulty. 

Where do I stand?
 
This is sadly typical of cases I see where banks, having the security of a personal guarantee, act in a way that is contrary to the interests of the business, knowing that you, the owner, will ultimately pay. In these situations the wording of the facility documentation and guarantee is crucial.
In this case, the bank appears to have represented to you that it would waive the underpayments and even increased your overdraft facility.
Undoubtedly, the written loan agreement will have a "no waiver" clause. It could be argued, however, that the verbal waiver by the bank manager induced the company to extend its liabilities by an increased overdraft.
This arrangement could amount to a new agreement, one of the terms being that earlier underpayments would not be relied upon to call in the loans. As guarantor, you could argue that the bank has breached the agreement and that the granting of any waiver or further advances to the business discharges your guarantee in its entirety.
However, most bank guarantees are worded in the bank's favour. Cases such as this depend on the particular facts and early advice should be taken. Patrick Selley is a consultant solicitor at Keystone Law 

email: patrick.selley@keystonelaw.co.uk

www.patrickselley.com 

Bank Guarantee Claims

 

 

Challenging a creditor’s right to call a personal guarantee
Personal Guarantees are more common now than ever and creditors can be quick to take action against a guarantor.  However, not all personal guarantees are enforceable.  My name is Patrick Selley and below I explain how you can defend a guarantee claim.

If you have given a personal guarantee and the creditor is seeking to enforce it, you should seek legal advice first as you may have grounds to challenge its validity.
Patrick Selley, who specialises in bringing claims against banks, financial advisors and financial institutions, explains that despite some creditor's best efforts, many individuals have successfully avoided some or all of their liability under a personal guarantee. 
In this, the first of a series of four articles, Patrick sets out the grounds for a successful challenge to the terms of the guarantee itself.
Follow the link below to learn more.....

http://www.patrickselley.com/creditors_right_to_call_personal_guarantee.php

Who Is Liable For Bad Investment Advice

 

 

The options open to you when a financial adviser fails
In these unstable market conditions many investors have lost money and sometimes this has been due to negligent financial advice. Patrick Selley describes the options open to you when a financial adviser fails to take reasonable care in their advice.
With two years of unstable market conditions many investors have suffered losses and everybody knows someone who believes that they have been the victim of poor or negligent financial advice which has resulted in a significant financial loss.
The global economic downturn has led to numerous investment funds performing badly and losing value quickly.  Often the results of such a loss are causing real suffering to the whole family and may even cause a change in the future education of the children.
Most people will recognise the standard warning that 'the value of an investment may fall as well as rise'. That is a risk we agree to take, but that decision has to be an informed risk in each case.
However, many investors have been advised to invest in assets where so-called experts simply did not have sufficient understanding that either a particular investment was unusually risky, or that it was too risky for the individual's needs.
Banks have often been accused of failing to know their customers properly and recommending investment products that have a risk rating that is unsuitably high. 
Industry leaders who have commented in the media include Paul Moore, Ex-head of Regulatory Risk, HBOS Plc, who said:
"You simply don't need to be an economic rocket scientist or mathematical financial risk management specialist……. You just need common sense".
Currently Barclays Bank is facing much criticism for directing customers to invest in "Morley" Global Income Funds which were described as 'cautious' by Barclays but were actually rated as 'aggressive' funds within the industry. Morley funds are now known as 'Aviva'.
Other investments that are currently the subject of concern to investors are:

• Arch Cru
• Shepherds Select Funds
• Keydata
• Integrity Maximiser.

Integrity provided Geared TEPS (Traded Endowment Portfolios), often purchased with a combination of a home mortgage and loans from HBOS or Newcastle Building Society. Both Integrity and some IFAs who sold these plans have been censured by the FSA for failing to understand their clients' needs.
Liability
Not every loss is something for which an adviser can be blamed. It is however something worth looking at, as like any other professionals, financial advisers have a duty to take reasonable care when acting for you.
The Financial Services Authority is charged with, amongst other things, regulating the conduct of those who advise members of the public on investments. It does so by a combination of Principles and Rules. S 150 of the Financial Services & Markets Act 2000 gives the consumer a 'right of action' where there has been a breach of the FSA Rules in relation to the conduct of 'investment business'.
An independent financial adviser or institution, such as a bank, is required to obtain sufficient information to understand fully your financial situation and requirements and to match that knowledge with appropriate investment advice and ensure you understand it.
"I appreciate that the investor was given illustrations and brochures relating to the product. However in addition to providing an explanation of the nature of the investment, the adviser has a responsibility to ensure it was suited to their circumstances and requirements. The fact that explanatory literature was provided is insufficient to demonstrate that the adviser fulfilled his responsibility with regard to the merits and suitability of the investment."
(Extract from Financial Ombudsman Adjudication)
If a financial adviser or bank fails to follow these steps properly then you the investor may be able to recover losses from the adviser or bank, who should be insured for this purpose. Broadly speaking the loss would be assessed by comparing the position the investor is in as a result of bad advice with the position that would have materialised if appropriate advice had been given and acted upon. In some cases the management fees alone that have been charged over time on complex investments could represent a substantial recovery if the advice given can be shown to have been inappropriate.
If you think that you may have been inappropriately advised in relation to any investment then please contact Patrick.

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 Patrick Selley

www.patrickselley.com 
 
Profile: Patrick Selley - Keystone Law
E: patrick.selley@keystonelaw.co.uk
T: 020 7152 6550
M: 07976 911936

Keystone Law 10th Anniversary at Kensington Roof Gardens

Bank Guarantee Claims

Challenging a creditor’s right to call a personal guarantee
Personal Guarantees are more common now than ever and creditors can be quick to take action against a guarantor.  However, not all personal guarantees are enforceable. Here, I explain how you can defend a guarantee claim.

If you have given a personal guarantee and the creditor is seeking to enforce it, you should seek legal advice first as you may have grounds to challenge its validity.
I specialise in bringing claims against banks, financial advisors and financial institutions, explains that despite some creditor's best efforts, many individuals have successfully avoided some or all of their liability under a personal guarantee. 
In this article I will set out the grounds for a successful challenge to the terms of the guarantee itself.
What is a guarantee?
A guarantee is a particular type of contract (suretyship) whereby one party, the "guarantor", agrees to be liable for the obligations of another party, the "principal".   
Generally speaking, the guarantee will be expressed to be in favour of a third party creditor which in most cases is a bank.  Usually, the obligation being guaranteed will be that the principal will repay the third party a sum of money on or by a particular date.  In a guarantee, the guarantor promises the third party that, in the event of the principal not performing its obligation, the guarantor agrees to perform it instead. 
Key issues for challenging a personal guarantee
When considering whether the personal guarantee can be enforced, there are four key questions to be answered:

• Are there any defences available to the guarantor?
• Has the creditor proceeded correctly against the guarantor?
• Are there any claims available to the principal against the creditor that can be relied on by the guarantor in reducing the guarantee liability?
• What documentation is there that will evidence the guarantor's arguments on one of the three grounds listed above and who has such documents?

This article concentrates on the first of these four key questions by examining the extent to which individual terms in a guarantee may be successfully challenged.
Breaching the equitable principles
When faced with a guarantee claim, one of the most important arguments that you can advance is that the creditor's actions have rendered the guarantee unenforceable pursuant to the equitable principles of suretyship. 
These equitable principles arise independently of the intentions of the parties and, to some extent, independently of the contractual terms.  Further, the creditor, its employees and on occasion its legal team often do not understand these equitable principles. 
One of the clearest examples of the operation of the equitable principles can be found where the creditor allows the principal more time than permitted in the guarantee to pay the guaranteed sums, or varies the terms of the initial loan to allow for further borrowing.  In such cases, the creditor may have rendered the guarantee unenforceable.
Other common examples of conduct on the part of the creditor that may render its guarantee unenforceable include:

• where the creditor deals negligently with other security held by it in respect of the same liabilities; and
• where the creditor alters the liability of the principal under the loan without the knowledge and consent of the guarantor.

Unsurprisingly lenders have sought to exclude these equitable principles through express wording added to the guarantee, for example:
"From time to time we may provide the customer with any credit or facilities, vary cancel or refuse credit, give the customer more time to pay, make any other arrangement, compromise with the customer, take or deal with any security ... If we carry out any of the above acts, or do or fail to do anything else this will not affect our rights under this guarantee".
The Unfair Terms in Consumer Contracts Regulations 1999
The Unfair Terms in Consumer Contracts Regulations 1999 (UTCCR), as its name suggests, applies only to consumer contracts and has the effect of rendering unenforceable any terms which are adjudged to be ‘unfair'.
According to the UTCCR, "consumer means any natural person who, on contracts covered by these regulations, is acting for purposes which are outside his trade, business or profession".
When creditors require a director of a company to give a guarantee, it is arguable that the guarantee is not given by the director ‘as a director' but rather that it is given by him in his capacity as shareholder, and is therefore not given by the director in the course of his trade business or profession.
Often guarantees are given by the guarantor's spouse as well, so as to include the martial home as an asset which is available to the creditor should it need to enforce the guarantee.  In such a case, the spouse can also argue that the term of the guarantee that excludes the equitable principles is unfair and so the guarantee should not be enforceable. Indeed, there is a higher likelihood of success for the spouse, where they are not involved in the company. In such a case it is highly advisable to seek legal advice before reverting to the creditor.
Where a term is considered unfair where it "has not been individually negotiated [it] shall be regarded as unfair if, contrary to the requirement of good faith, it causes significant imbalance in the parties' rights and obligations arising from the contract, to the detriment of the consumer."  A "term shall always be regarded as not having been individually negotiated where it has been drafted in advance and the consumer has therefore not been able to influence the substance of the term".
The courts will assess the unfairness of a contractual term, taking into account the nature of the goods or services for which the contract was concluded and by referring, at the time of conclusion of the contract, to all the circumstances attending the conclusion of the contract and to all the other terms of contract or of another contract on which it is dependent.
Convincing the court that a term is unfair
Only the court can determine whether a term is unfair.  However, the creditor might not wish to incur the expense of legal proceedings it may lose and may therefore decide not to enforce the guarantee or to settle. 
In both cases, a guarantor will need to advance a strong argument and to produce as much supporting evidence and documents as are available.  Where the creditor holds relevant documentation, the guarantor is entitled to be provided with copies upon request.  Creditors are often slow to recognise the extent of relevant documents that they hold, or are just reluctant to produce them and therefore properly framed requests for documents are important in defending guarantee claims.
If you wish to challenge a personal guarantee, you need to plan a strategy carefully.  Given the potentially high cost of litigation, it may be preferable to reach a settlement with the creditor.  The terms of such settlement can be affected by the manner and timing of contact with the creditor.  Careful and targeted use of disclosure requests for documentary evidence of matters which would go to the question of unfairness can be a useful tool in bringing about an advantageous settlement.
Conclusion
It is often possible to challenge a creditor's right to enforce a personal guarantee.  However, doing so is rarely simple and legal advice from a specialist in this area is highly advisable.
Unsurprisingly, creditors will firmly reject any challenge to a personal guarantee and have standard methods of so doing.  The analysis of the relative merits of their counter-arguments is important. 
Also it should not be forgotten that in most cases the creditor is a bank, and that currently the banks do not wish give the courts the opportunity to strike down a personal guarantee, as to do so would set a dangerous precedent potentially affecting thousands of guarantees held by them. As a result, when confronted with a well advised guarantor, the banks' firm rejections can give way to a willingness to settle.
In his next articles looking at personal guarantees I will address:

• the effect of a creditor's failure to observe important procedural formalities;
• undue influence and other defences; and
• document disclosure requirements.

Patrick specialises in bringing claims against banks, financial advisors and financial institutions in relation to personal guarantees, negligent financial advice and mis-selling.  He is also is a qualified mediator and a Fellow of the Chartered Institute of Arbitrators.

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 Patrick Selley Profile: Patrick Selley - Keystone Law E: patrick.selley@keystonelaw.co.uk T: 020 7152 6550 M: 07976 911936

www.patrickselley.com