A key and very important area of our forensic accounting work at the moment is assisting businesses who may have been negligently mis-sold interest rate swaps or hedging products by their bank. Our expertise is of great relevance and importance when it comes to calculating the consequential losses that may have arisen as a result of the banks mis-selling their products.
The banks have caused untold losses, both financial and emotional, with their aggressive mis-selling of interest rate products to companies, who may not have been fully aware of what they were being sold. With the FCA review process having been running since May 2013, the onus is now on the banks’ clients to prove the consequential losses that have been caused by the banks’ behaviour.
While the banks have allocated a reported budget of around £3.5 billion to deal with claims against them, there is more uncertainty over the more complex issue of consequential loss, that includes claims for loss of profits, loss of new business and more “invisible” consequences such as missed opportunities, flat growth, tarnished business relationships or even ill health brought on by the stress of financial difficulty.
For each consequential loss claim, the onus is on the customer to demonstrate that the legal tests are met, most crucially causation. Frenkels Forensics can assist with preparing such reports setting out the consequential losses arising from the miss-sold swaps to clearly demonstrate to the banks the effects of their mis-sold products.
One of our clients, Kays Hotels Limited, recently featured in the news. Barclays Bank sold Kays Hotels an interest rate product with Kays bringing a claim for mis-selling in 2012. Barclays asked the High Court to strike out Kays Hotel’s claim on the basis that the swap was sold more than 6 years before the claim was lodged. However, the High Court stated that the starting point for limitation could be argued to be the time that Kays had reason to investigate making the claim and thus refused to strike out their claim. We are currently assisting Kays Hotels with the consequential loss claim.
Quite often a client may not even realise that they have a case to fight, so if you think you have been wronged by the banks, and think you have a consequential loss arising from a miss-selling case, it is worth checking with a forensic accountant.
Get in contact with Frenkels Forensics. Our team of forensic accounting experts can review your case with you and assist with the calculation of consequential losses.
By Vitek Frenkel – find me via Google+