F – Financial Services & Markets Act 2000
3/7/20
DAVIS v LLOYDS BANK PLC [2020] EWHC 1758 (Ch)
The claimant sought damages for breach by the bank of statutory duty under the FCA rules by its conduct of a review of the mis-selling of an interest rate hedging product to the claimant. The court held that by participating in the review the claimant had not made a complaint to the bank within the DISP rules of the FCA Handbook. In addition, any failure to comply which the review agreement would not have been a breach of the DISP rules as the DISP rules did not incorporate the review rules.
22/6/20
TARGET RICH INTERNATIONAL LTD v FOREX CAPITAL MARKETS LTD [2020] EWHC 1544 (Comm)
The claimant claimed losses caused by the alleged failure of the defendant to act on instructions (stop loss orders) requiring open positions in foreign exchange transactions to be closed out. The claim was dismissed. The court considered the extent to which duties under the FSMA 2000 may be relied upon as giving rise to co-extensive duties of care at common law [61]. The court rejected a submission that the COBS rules in the FCA Handbook were implied into the agreement between the parties [88]. The court considered the effect of the COBs rules on best execution [114] and held that even if they had been incorporated, they would not have been breached. Mere transmission of an instruction did not create a binding obligation on the defendant to do anything.
18/5/20
ADAMS v OPTIONS SIPP UK LLP [2020] EWHC 1229 (Ch)
The provider/administrator of self-invested pension plans which operated on an execution-only basis was not liable to the claimant investor for the losses claimed to have been suffered by entering into a manifestly unsuitable underlying investment within a SIPP "wrapper". Considers the scheme of the Financial Services & Markets Act 2000 [75] and the meaning of advising on and arranging investments [83]. On the facts, a mere introduction was insufficient to amount to arranging an investment [117]. Nor had advice been given by the introducer in respect of the SIPP [125]. Recommending the SIPP was insufficient [126]. There had been no breach of the requirement to act fairly in the client’s best interests (COBS r 2.1.1) because the defendant undertook no duty to advise and it was the underlying investments, not the SIPP, which had been unsuitable [157]. The defendant had not assisted in the commission of a tort by the introducer and was not therefore liable as a joint tortfeasor [169].
2/4/20
FCA CONSULTATION ON TEMPORARY FINANCIAL RELIEF FOR CUSTOMERS IMPACTED BY CORONAVIRUS
The FCA is consulting until 9am on 6/4/20 on proposals to come into force by 9/4/20. Customers facing difficulties with finances as a result of the impact of coronavirus are to be offered a temporary payment freeze on loans and credit cards for up to three months. For those who already have an arranged overdraft on their main personal current account, up to £500 is to be charged at zero interest for up to three months. Firms are to make sure that all overdraft customers are no worse off on price when compared to the prices they were charged before the recent overdraft changes came into force. These temporary measures should not affect credit ratings.
26/7/17
CAMERON DEVELOPMENTS (UK) LTD v NATIONAL WESTMINSTER BANK PLC [2017] EWHC 1884 (QB)
On the facts, acceptance of a settlement offer, following the FSA swap mis-selling review process, precluded a subsequent claim for consequential loss.
27/11/15
THORNBRIDGE LTD v BARCLAYS BANK PLC [2015] EWHC 3430 (QB)
A claim for damages for mis-selling an interest rate hedge was dismissed. Considers when a bank assumes an advisory relationship [25]. On the facts the bank had given information not advice. A letter stating that the bank may from time to time provide advice did not amount to notification that it was advising. Even if advice was given, the bank assumed no advisory duty. The fact that the bank’s representative was said to be a Corporate Risk Adviser was not of significance. Disclaimers in the bank’s documentation prevented any advisory duty arising, were not exclusion clauses and were in any event not unreasonable contrary to UCTA. Any other duty was limited to ensuring that information given was not misleading [118]. Reference in the bank’s terms of business to the agreement being subject to FSA Rules did not incorporate those rules into the terms. Nor on the facts could the bank be criticised for failing to give more information about break costs. The swap did what it was supposed to do and had not been unsuitable. The court was not satisfied that a cap would have been taken even if it had been offered so the case also failed for lack of causation.
8/10/15
WORTHING v LLOYDS BANK PLC [2015] EWHC 2836 (QB)
Investment advice given by the bank in relation to the claimant’s investment portfolio had not been negligent or given in breach of the COBS rules.
25/3/15
FINANCIAL CONDUCT AUTHORITY v CAPITAL ALTERNATIVES LTD [2015] EWCA Civ 284
The judge below had been right to find that four schemes had been collective investment schemes within s 235 Financial Services & Markets Act 2000.
20/2/15
FOS had been right to determine that it had jurisdiction in relation to a complaint against accountants and that the scheme could be regarded as a collective investment scheme. Tax advice can include investment advice even if the dominant purpose for which the advice is sought is tax avoidance.
27/8/14
BAILEY v BARCLAYS BANK PLC [2014] EWHC 2882 (QB)
The bank informed an individual borrower that substantial breakage fees would be payable if he terminated a swap agreement early but that he could avoid that liability by novating the swap to a company associated with him. This was done. The company brought proceedings against the bank for mis-selling the swap. On cross-applications the court refused the company for permission to amend, and granted the bank summary judgment dismissing the claim. Any claim to rescind the swap for misrepresentation made when the borrower took it out could not be asserted after the novation, because the novation was a new agreement. The bank had not breached the FSA Conduct of Business Rules in connection with the novation. It had acted in a non-advisory capacity without making any personal recommendation. The Company had understood what was involved in the swap and knew the risks by the time of the novation. The Company could not assert a cause of action under s 150 FSMA 2000 because it was not a private person. The COBS rules had not been incorporated in the contract between the bank and the company and the bank had not engaged in duress or other unconscionable conduct.
4/2/14
CLARK v IN FOCUS ASSET MANAGEMENT & TAX SOLUTIONS LTD [2014] EWCA Civ118, [2014] 1 WLR 2502
The fact that a complaint of bad investment advice had been upheld by the Financial Ombudsman and accepted by the claimant, prevented the claimant from bringing legal proceedings to recover compensation above the maximum £100,000. The award was a judicial decision and the doctrine of res judicata applied.
9/10/13
GREEN v ROYAL BANK OF SCOTLAND PLC [2013] EWCA Civ 1197
When selling an interest rate swap the bank had a statutory duty under the FSA Handbook Conduct of Business Rules to take reasonable steps to ensure that the customers understood the risks involved. But a claim for breach of statutory duty was admitted to be time-bared and no concurrent duty existed at common law because the bank had not crossed the line between providing information and giving advice.
18/6/13
EMPTAGE v FINANCIAL SERVICES COMPENSATION SCHEME LTD [2013] EWCA Civ 729
A claimant given negligent advice to increase her mortgage and invest in Spanish property, was entitled to compensation in respect of the Spanish property. The compensation scheme had been wrong to refuse compensation on the ground that the purchase of the Spanish property was unregulated business outside the scheme. All the loss flowed from the negligent mortgage advice which was within the scheme. Credit would have had to be given for the value of the asset purchased but the Spanish property had no residual value so there was no element of double recovery.
13/6/13
R (ON THE APPLICATION OF WILLFORD) v FINANCIAL SERVICES AUTHORITY (No 2) [2013] EWCA Civ 674
On an application to quash an FSA disciplinary decision, the court refused to order that the applicant be given anonymity. Open justice required proceedings to be in public. Anonymity had to be strictly necessary for the proper administration of justice.
21/5/13
R (ON THE APPLICATION OF CALLAND) v FINANCIAL OMBUDSMAN SERVICE LTD [2013] EWHC 1327 (Admin)
The fact that it had taken the FOS 6½ years to determine a complaint was not a breach of the complainant’s right to a fair trial under Art. 6 of the ECHR. Most of the delay was down to the complainant’s own conduct. Nor would an oral hearing have assisted in resolving the issues.
1/2/13
ZAKI v CREDIT SUISSE (UK) LTD [2013] EWCA Civ 14
A bank had arranged credit for the claimant in connection with designated investment business within COB 7.9.3R although the loan had been made by an associated company. To comply with COB 7.9.3R, suitability of the loan had to be considered not just at the outset but each time the loan was drawn. Failure to make an assessment of a customer’s financial standing within COB 7.3.9R was a matter of process and did not necessarily mean the bank had not taken reasonable steps to ensure suitability. The same applies under COB 5.3.5R in relation to suitability of advice. But the test of suitability under COB 7.9.3R is narrower than under 5.3.5R because the latter only applies when a personal recommendation has been made. A lending arrangement could be suitable even if a personal recommendation was not. On the facts the lending arrangements were suitable so the claim failed. Even if the lending should not have taken place, that would not necessarily have made the bank liable for all the claimant’s losses.
21/12/12
GREEN v THE ROYAL BANK OF SCOTLAND PLC [2012] EWHC 3661 (QB)
It had been sufficient for a bank, when providing information about a swap, to tell the customer that if a swap was taken out and terminated early there would be a cost or benefit depending on market conditions at the time. That explanation was not negligent, misleading unclear or unfair and was sufficient to explain the risks. It had been open to the customer to ask for details of the costs, but the customer had not done so. The risk that the costs would be as high as they turned out to be had been theoretical at the time and was not one which had needed to be positively stated. The bank had given information, not advice, and had not in any event breached any advisory duty.
19/12/12
CLARK v IN FOCUS ASSET MANAGEMENT & TAX SOLUTIONS LTD [2012] EWHC 3669 (QB)
The fact that a complaint of bad investment advice had been upheld by the Financial Ombudsman and accepted by the claimant, did not prevent the claimant from bringing legal proceedings to recover compensation above the maximum £100,000. The award was final only in the sense that it ended the Ombudsman process. The scheme does not prevent subsequent legal proceedings.
10/12/12
OLLERENSHAW v FINANCIAL SERVICES AUTHORITY [2012] UT (Tax)
The FSA had been entitled to find that former officers of a mortgage brokerage firm had pressurised the broker’s advisers to sell PPI policies in disregard of FSA warnings to ensure such policies were suitable and avoid bias towards one lender. There had also been a failure promptly to report a shortfall in the firm’s capital adequacy. But the breaches of duty were not as serious as the FSA had concluded and the penalties were reduced. In the case of one of the officers, prohibition orders made on the basis that the officers were not fit and proper persons to practice, was discharged.
11/10/12
EMPTAGE v FINANCIAL SERVICES COMPENSATION SCHEME LTD [2012] EWHC 2708 (Admin)
A broker had been negligent to advise the claimant to remortgage her home to raise funds to buy a property in Spain to let out so as to use the rental income to service the mortgage. The claimant was entitled to compensation from the FSCS. Her loss derived from taking out an unaffordable mortgage. The mortgage transaction was a regulated activity. It made no difference that part of the funds raised had been for the purchase of property abroad, which was not a regulated activity.
21/8/12
GRANT ESTATES LIMITED v THE ROYAL BANK OF SCOTLAND PLC [2012] CSOH 133 (Outer House, Court of Session Scotland)
A company which entered into an interest rate swap was not a private person within the meaning of s 150 FSMA 2000 and therefore had no statutory right of action against a bank for breaches of FSA rules. The fact that the bank’s terms of business were expressed to be subject to the applicable FSA rules in the event of any conflict did not incorporate the applicable FSA rules by reference.
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