Our Financial Services Litigation for Business Expertise

Our Financial Services Litigation team offers a wealth of experience. Between them our lawyers have around 60 years’ experience of resolving disputes relating to financial services. We have recognised financial services qualifications, and experience of working with the regulator itself, giving us the industry knowledge required to gain real insight into the issues and achieve the most positive outcomes for our clients.

Customer Disputes

Complaints are a fact of life for businesses, no matter how well run, and none more so than those that are authorised by the FCA. Some complaints are clearly justified, some are obviously not, but we generally find that they fall somewhere in between, and that the outcome will depend on the nature of the response. Whichever bracket they fall into, complaints inevitably take up a lot of time and energy that is usually more profitably employed on other matters.

We pride ourselves on our ability to positively affect the outcome of complaints for our clients by delivering clear and persuasive arguments (recognising of course that complaints must be dealt with fairly) in an understanding and courteous manner. Even where complaints are clearly justified, it is often possible to make real savings by limiting the amount of redress payable.

We would normally advise involving us as early as possible in the complaints process – preferably before the matter is referred to the Financial Ombudsman Service (FOS) – because it can be difficult to recover from unhelpful statements or the ‘wrong’ arguments. Nevertheless, we can assist at any stage.

Regulatory Action

We assist authorised clients in dealing with supervisory and enforcement action brought by the FCA. We can advise for example on FCA investigations, the appointment of Skilled Persons, and proposals to vary Part 4A Permissions. We appreciate that these actions must be approached delicately, not least because of the regulatory obligation always to be open and cooperative with the FCA.

We can also assist in the defence of claims by the FCA alleging unauthorised business or financial promotions. We acted for Anthony Lewis in the case of Financial Services Authority v Mudge & Lewis, a case in which the FSA (the FCA’s predecessor) alleged the unauthorised establishment and promotion of a collective investment scheme amongst other things.

Regulatory action of this kind is sometimes accompanied by a freezing order (or a requirement attached to a Part 4A Permission which has much the same effect) making it difficult to incur the legal costs necessary to defend the action, or indeed to operate the business freely. We are highly skilled in dealing with these aspects, having been instrumental in the landmark case which gave rise to the Dadourian Guidelines.

Pensions Disputes

Pensions produce a significant number of disputes, even though the situation has improved since A Day. We certainly see a steady stream and act for both individuals and scheme trustees in these cases.

Some of the cases we see involve allegations of mis-selling. Examples include transfers out of defined benefit schemes or old-style retirement annuity contracts containing guaranteed annuity rates (GARs); transfers into SIPPs with small funds or to facilitate risky investments not permitted under standard pension schemes; income drawdown in circumstances where the income could be unsustainable without taking overly high investment risks.

Some cases are better characterised as ‘maladministration’. These tend to be claims for breach of contract or trust or of some other duty of care by the scheme’s trustees, managers or administrators. These include disputes relating to scheme funding, transfer values, unauthorised scheme loans, death benefits, benefits exceeding HMRC maxima and other unauthorised payments, age discrimination, and ill-health and other early retirement issues.

We also have experience of acting in cases involving a refusal to transfer benefits due to alleged fraud/negligence by scheme members which affects the sponsoring employer, and in cases involving the Pension Protection Fund and the Pensions Regulator

We take pride in helping our clients achieve positive outcomes, and we are well versed in using the Pensions Ombudsman and of course the courts for that purpose.

Interest Rate Swaps

Interest rate swaps are complex financial derivatives or specifically “contracts for differences”. They allow two parties to exchange obligations based on interest rates, and can be used both for hedging and speculation purposes.

They were commonly sold to business people and SMEs by the banks, often as a pre-condition of the bank agreeing to lend funds.

Customers were informed that taking out these products would provide protection from rising interest rates, only to find rates falling to record low levels soon afterwards, leaving them with much higher interest payments than they would otherwise have wished to pay, or breakage costs of up to 30% of their total borrowings.

The FSA (the FCA’s predecessor) concluded in its Interest Rate Hedging Products Pilot Findings report of January 2013 that over 90% of the cases it had looked at did not comply with one or more of its regulatory requirements. The banks’ explanations of the breakage costs came in for particular criticism.

Certainly in our experience the common feature of these claims is that the banks in question failed to provide a “clear, fair and not misleading” explanation of the risks.

We have acted in large numbers of these cases, including Messrs Green and Rowley’s appeal to the Court of Appeal in Green & Rowley v Royal Bank of Scotland, and we are experienced in pursuing claims for our clients in the courts, via the Financial Ombudsman Service (FOS) and the FCA (formerly FSA) review scheme.

Commercial Disputes

From time to time all businesses find themselves in embroiled in commercial disputes. Supported by our experienced Commercial Litigation team we are able to handle all kinds of disputes for our financial services clients, whether these are purely commercial in nature or have a particular financial services element.

Our experience covers a wide range of disputes, and includes for example disputes with insurers relating to professional indemnity insurance (PII), disputes between authorised firms and appointed representatives over the termination of a relationship, commission clawback, non-disclosure in connection with PII, amongst other things. For more information see our Commercial Litigation pages here.

We can of course also advise via our Corporate and Commercial Department on these matters and others with a view to preventing disputes – or at least ensuring our clients are well placed to come out on top. For more information see here.

Film Partnerships

Thousands of people relied upon professional advice from their financial advisors and accountants to use these complex vehicles as part of their personal tax planning. At the time of the advice, film partnerships were generally described as legitimate tax deferral schemes. Indeed, these schemes flourished in the wake of the government offering tax incentives to investors, which were legislated with a view to increasing support for the British Film Industry. The tax reliefs were widely exploited and eventually withdrawn, but new schemes emerged which sought to continue film-related tax mitigation benefits. Most investors accepted that HMRC may challenge the scheme they invested in. However, an explanation of the consequences of that challenge being successful is demonstrably absent from almost all the advice we have considered. It is well established that professional advisors are under a duty, when advising their client on the merits of a particular course of action, to also identify and explain the risks, and even more so when the consequences of the risk eventuating are life-changing – some investors now face bankruptcy. It is certainly possible that, in failing to point out the potentially devastating consequences of participating, the adviser was negligent. However, due to the passage of time since investing in these schemes, some participants will be unable to take any action to recoup their losses. If you are a member of such a scheme and you believe that it may have been mis sold, you must not delay in seeking legal advice in that regard, if only to preserve your ability to make a claim in due course.

For more information please contact Laura Hazell.