Long awaited certainty on cut-off for PPI claims

In a previous blog post, we discussed how the Financial Conduct Authority (“FCA“) was backing a call by the banks for the introduction of a two year cut-off for PPI claims.

Deadline

The FCA has now announced that the final deadline for making a new PPI complaint will be 29 August 2019.   Andrew Bailey (Chief Executive of the FCA) commented that “putting in place a deadline and campaign will mean people who were potentially mis-sold PPI will be prompted to take action rather than put it off. We believe that two years is a reasonable time for consumers to decide whether they wish to make a complaint“. Continue Reading

Subject access requests likely to increase in customer disputes?

Financial institutions often receive a subject access request made under the Data Protection Act 1998 (“SAR”) from individual customers as pre-cursor to a formal complaint or a legal claim.

That is because a SAR enables the customer to access a significant amount of information held by the organisation about him or her. A customer can thereby access potentially sensitive information, effectively by way of advance disclosure at minimal cost which can then enable a customer to build a legal case against the institution.

SARs cannot be ignored and must be responded to promptly and in any event within 40 days of receipt.

In the recent case of Dawson-Damer v Taylor Wessing LLP, the Court of Appeal made three important points about SARs:

  • A SAR will be valid and must be responded to even if a collateral purpose is to obtain information for the purposes of litigation.
  • The exemption in the Data Protection Act 1998 (DPA) that allows data controllers to withhold material that is subject to legal professional privilege does not extend to other protected information, such as information that can be withheld under trust law principles. .
  • It is not necessary to supply personal data in response to a SAR if to do so would involve disproportionate effort (section 8 (2) of the DPA). The Court said that assessing proportionality includes looking at the work needed to find the relevant personal data and then to produce copies.

The final point is likely to be welcomed by financial institutions facing broad and unreasonable SARs. But other aspects of the decision are not so helpful and we may see an up-tick in individuals using SARs in disputes, directing the SAR to both counterparties and their solicitors.

Squire Patton Boggs appointed to FCA/PRA Skilled Person panel

“Skilled Person” reviews under section 166 of FSMA have become a major feature of the financial services regulatory landscape in recent years. FCA figures show that 51 reports were commissioned in 2016 alone, up from 47 in 2015. Under FSMA the regulators have wide powers to require financial services firms to commission skilled person reports into almost any aspect of the firm’s business.

Following a thorough tender process Squire Patton Boggs has been appointed as one of only three law firms on the regulators’ panel of organisations approved to conduct skilled person reviews on financial crime issues (Lot E of the panel). We have demonstrated to the FCA that we have the skills, experience and expertise to conduct reviews on all aspects of financial crime including market abuse, anti-money laundering, anti-bribery and corruption, third party payments, market manipulation, insider trading, and governance of these areas. The revised skilled person panel went live on 1 April 2017, and will run for four years.

Firms can sometimes view the appointment of a skilled person as a negative development and potentially a stepping stone into the FCA enforcement process. But our general experience is that if proactively managed (both by the firm, its advisers, and the skilled person) a s.166 review can be a positive exercise in identifying and resolving areas for improvement in a collaborative way with FCA supervisors. Where it is approached in the right way, enforcement action following on from a skilled person report is actually much rarer than firms might think.

We are looking forward to working with the regulators and firms involved in skilled person reviews during the life of the panel. If you are facing a s.166 skilled person review or would like to discuss the panel and how we can help clients in a regulatory process, please don’t hesitate to get in touch.

Supreme Court confirms London Whale notices did not identify Achilles Macris

In a previous blog I described how the FCA is facing a number of challenges from individuals complaining that they are identifiable from regulatory notices addressed to their employers. By way of recap, under section 393 of the Financial Services and Markets Act 2000 (“FSMA“), individuals are granted third party rights, meaning that if an FCA notice identifies and is prejudicial to someone other than the person to whom it is given, a copy of the notice should be given to them.  Continue Reading

Insurers, professionals and lenders: two Supreme Court decisions in one day

AIG Europe Limited v Woodman and others [2017] UKSC 18

Supreme Court clarifies the correct interpretation of the aggregation clause contained in the Solicitors’ Minimum Terms and Conditions of Insurance (“MTC”) in what will be considered a partial victory for insurers. Continue Reading

High Court reaffirms FOS discretion to depart from the law when “fair and reasonable”

The recent case of R (Aviva Life and Pensions) v Financial Ombudsman Service discusses and reaffirms the position that the Financial Ombudsman is not bound to follow the law when making its determinations but must instead make decisions that are “fair and reasonable in all the circumstances”. This reaffirms the Court of Appeal decision in R (Heather Moor & Edgecomb) v FOS from 2008, but casts some doubt upon whether the law in this area should remain as it is. Continue Reading

First major LIBOR rigging claim dismissed by Financial List judge: speedread

After a 38 day trial, Mrs Justice Asplin handed down a 187 page judgment just before Christmas in the long-running Property Alliance Group Ltd v The Royal Bank of Scotland plc case. She rejected claims of mis-selling, breach of good faith obligations and misrepresentations associated with LIBOR.

Property Alliance Group sued RBS over four interest rate swaps taken out between 2004 and 2008, linked to GBP 3 month LIBOR. RBS moved the relationship to a division known as the Global Restructuring Group (“GRG”) in Spring 2010. PAG terminated the swaps in June 2011, incurring an £8.3 million break cost. PAG brought claims that fell into three categories: Continue Reading

Court of Appeal rejects Titan Class X claim: speedread Q & A

(This article was first published on Lexis®PSL Banking & Finance. Click for a free trial of Lexis®PSL)

What was the appeal about?

Credit Suisse Asset Management (“CSAM”) was the originator of Titan 2006-1, a commercial mortgage backed securitization (“CMBS”). The Titan 2006-1 SPV (“Titan”) issued eight tranches of bonds (A to H) for a total of EUR 723 million. It used the proceeds to acquire commercial real estate loans from CSAM.

Like many CMBS structures of that vintage, the Titan CMBS featured “Class X notes”. These were a small (EUR 50,000) tranche of bonds that ranked ahead of the other tranches in certain respects and bore a special variable rate of interest. Their purpose was to ensure that if Titan was due to receive more in interest from the loans than it owed to the tranche A to H bondholders, that “excess spread” would be paid to the Class X noteholder (which was CSAM). In other words, the Class X notes allowed CSAM to extract any surplus interest from the loans it had securitized, rather than leave it trapped in Titan.

Because the excess spread was generated across hundreds of millions of euros of loans and bonds but paid as interest on only EUR 50,000 of Class X notes, the Class X interest rate could be thousands of percent and tens of millions of euros.

The loans Titan had acquired suffered significant defaults. Titan became unable to pay the interest due on the bonds it had issued. However, interest was still due on the Class X note, because the transaction documents defined the Class X interest rate by reference to sums due to Titan on the loans, rather than sums actually received.

Disputes arose between CSAM and some class A to H noteholders about various aspects of how the Class X interest rate should be calculated, and when the Class X notes should be redeemed. These issues were decided by Mr Justice Etherton in the High Court earlier in 2016. When the case reached the Court of Appeal, only one issue remained: whether, when calculating the Class X interest rate, the fact that default interest was due on some of Titan’s loans should be taken into account. Continue Reading

FCA and PRA announce changes to enforcement and disciplinary process

On 1 February 2017, the Financial Conduct Authority and the Prudential Regulation Authority released a policy statement that the regulators say is aimed at strengthening the transparency and effectiveness of their enforcement and decision-making processes. This policy statement follows on from an earlier Treasury review in these areas. Continue Reading

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