Most people assume a bank is too big to sue. In our experience the bigger obstacle is usually finding a firm that is free to act against one.
Jersey is a small jurisdiction with a large finance industry. Many of the Island’s law firms hold standing retainers with the banks, the trust companies and the fund administrators, or are part of groups that do. That is entirely legitimate, but it has a practical consequence for anyone who has been let down by an institution: the firms best equipped to bring the claim are frequently conflicted out of bringing it.
Sinels holds no institutional retainers and has no external stakeholders. We are able to act against banks because nothing in our client base prevents it, and we have done so repeatedly over three decades.
What claims against banks actually look like
Very few claims against a bank are about a single dramatic act. Most arise from one of a small number of recurring patterns.
- Mis-selling. A product was sold on a basis that did not match what the customer needed or understood, and the risk only became visible later.
- Negligent advice. Advice was given, relied upon, and turned out to be wrong in a way that a competent adviser would have avoided.
- Breach of mandate. The bank did something with the account that it had no authority to do, or failed to do something it was obliged to do.
- Failures around fraud. Funds moved through accounts in circumstances where questions should have been asked, and were not.
- Enforcement conduct. Security was called in, or facilities withdrawn, in a manner that caused loss beyond what the contract permitted.
The common feature is that the bank holds nearly all of the documents. That single fact shapes everything about how these cases are run.
Why the documents decide these cases
A customer typically has their own file: the agreement, some correspondence, perhaps a note of a meeting. The bank has the internal credit papers, the sales scripts, the product training material, the compliance sign-offs and the file notes written by the person who sold the product. The gap between those two records is usually where the claim lives.
This is why we front-end load. Before proceedings are issued we want the customer’s own file reconstructed properly, the chronology fixed, and a clear view of which documents the bank will have to produce. A claim built this way tends to settle earlier and on better terms, because the institution can see that the disclosure exercise is going to be uncomfortable.
The opposite approach, issuing quickly and hoping the evidence emerges later, is how claimants end up funding a long fight from a weak position.
The tools available in Jersey
The Royal Court of Jersey has a robust set of remedies, several of which have no exact equivalent elsewhere.
- Disclosure orders can be sought against the institution and, in appropriate cases, against third parties holding relevant records.
- Arrêt entre mains, a customary law attachment served on a party holding assets, can be deployed where there is a well-founded concern about dissipation. In practice, Mareva-style freezing relief now does much of this work.
- Representative proceedings under the Royal Court Rules allow similar claims to be run together where the claimants share a genuine common interest.
Proceedings are normally begun by Order of Justice, setting out the full particulars of the claim and the relief sought.
Timing matters more than most people expect
Jersey’s ordinary prescription period is three years, which is considerably shorter than the five or six years applying in many other jurisdictions. Whether time has started to run is often itself a contested question, particularly where the problem was concealed or only became apparent long after the event.
If you think you may have a claim against a bank, the single most useful thing you can do is establish where you stand on time before doing anything else. Claims are lost on prescription that would otherwise have succeeded.
Bringing a claim together with others
Where an institution has sold the same product on the same basis to a number of customers, running the claims together can transform the economics. The disclosure obtained for one claimant assists all of them, the expert and forensic costs are shared, and a pattern of conduct is far harder to explain away than a single transaction.
We have recovered £40 million in a claim of exactly this kind, brought by a group of four against a financial institution. Group size was not the point. What mattered was that the conduct was common to all of them and that the intelligence was gathered early.
If you are considering a claim
Gather your own documents first, including anything you signed, anything you were sent, and any note you made at the time. Establish the date on which you first knew something had gone wrong. Then take advice on prescription before anything else.
We are happy to tell people at the outset when a claim does not work. That is a better outcome for everyone than discovering it two years and a great deal of money later.
If you would like to discuss a potential claim against a bank or financial institution, contact us or call +44 (0)1534 620500.