06 May 2015
Financial Ombudsman to Consider Consequential Loss Claims
The Financial Ombudsman Service (FOS) has confirmed it may consider consequential loss claims, which have already been rejected under the beleaguered FCA scheme.
This is good news for the owners of small and medium sized businesses who have been suffering after they were mis-sold an Interest Rate Hedging Product (IRHP).
Many of these business owners have been trying to get full redress for years but have had their claims rejected or have not met the disproportionate and inconsistent conditions set by the banks and allowed by the FCA. For many business owners, this has meant personal and business losses of many millions of pounds.
We are now nearing the third anniversary of the announcement by the FSA (now FCA) that it had agreed with the four major high street banks that it would provide appropriate redress where mis-selling had occurred. This is two anniversary's too many for those who have been severely impacted and are in need of adequate redress, especially as the announcement was for banks to provide redress " as swift as possible" on 29 June 2012.
But the FCA review has sadly failed many business owners.
To date a large number of customers mis-sold IRHP products have been offered basic redress (direct losses associated with the mis-sold IRHP).
If the customer chooses not to pursue a consequential loss claim, then the offer will have 8% interest added and become a full and final settlement.
The majority of businesses who have been severely impacted by the effects of a mis-sold IRHP may well have indirect losses running far higher than the basic payments made under the IRHP. In the worst case scenario an otherwise healthy company may have become insolvent as a result of the IRHP, and therefore these customers have often spent considerable time and expense to present the case comprehensively and fully to the bank to consider in the FCA agreed process.
Regrettably, and as is all too familiar, in the vast majority of cases the banks are rejecting claims for consequential losses, often in letters a few paragraphs long with no detailed explanation or reasoning. This to us is unacceptable – it is unfair and contrary to a fair hearing and this is currently being explored through the courts in potential judicial review actions.
FOS and consequential loss?
For those whose consequential loss claim is rejected and who wish to avoid litigation or are unable to litigate there may now be a way to seek the recovery of consequential loss by way of complaint to the Financial Ombudsman Service (FOS), up to the FOS’s capped limit.
In most cases once the review is concluded the bank will provide 6 months to complain to the FOS, and subject to eligibility criteria a customer may be able to complain for the award of consequential losses arising from the mis-sale of the IRHP and there is a possibility seeking an award up to the capped limit of £150,000 for consequential loss.
There is currently no determinative position on such claims within the FOS, but we have been informed that FOS is now considering the merits of complaints received.
If you are in this position Slater and Gordon’s Specialist Litigation Lawyers are able to assist in preparation of complaints to the FOS on a number of fee arrangements, and have experience of making complaints on a broad range of issues. We recommend you take advice and if you would like to speak to someone please call freephone 0800 916 9015 or contact us online and we will call you.
Slater and Gordon Lawyers are one of the largest law firms in the UK. We have over 1,450 staff and offices in London, Manchester, Liverpool, Birmingham, Sheffield, Milton Keynes, Bristol, Cardiff, Halifax, Cambridge, Edinburgh, Newcastle, Derby, Wakefield, Merseyside and meeting rooms in Hull and in Bramhall, Cheshire.
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