Making a claim against your bank – 5 things to consider
Many of us have issues with our banks and building societies, whether these are unfair charges, mis-sold products or simply bad advice. Unfortunately these can sometimes result in individuals and businesses considering whether to make a claim against their bank. This can be a daunting prospect, so based on my experience of acting for a number of the big banks, I have set out 5 key points to have in mind when deciding what to do.
1. Time limits
Before you get started, it is worth considering whether you might be out of time to make a claim.
The general rule is that you have to make a claim within 6 years of the date on which the claim arose. So in a contractual claim, it would be 6 years from the day on which the contract was broken. This can be extended in some claims, such as where bad advice is involved, to being 3 years of when you had (or should have had) enough knowledge to bring a claim.
The examples above are a rule of thumb only; if you have concerns about time limits before issuing a claim then I suggest taking legal advice as soon as possible.
2. The basis of your claim
For a successful claim you will typically need to be able to demonstrate that:
a) the bank owed you a duty of care;
b) it breached it in some way; and
c) that breach caused you to suffer losses.
This can be difficult, particularly as bank documents tend to be drafted to try and prevent them being held liable for your losses (although clauses which try to do this can potentially be challenged).
It is important that you get together as much information as possible so that it is possible to work out the merits of your potential claim. To help with this you might consider making a Data Subject Access Request (or “DSAR”) of the bank to ask for a copy of all of the personal information they hold about you.
3. The Financial Ombudsman Service (the “FOS”)
The FOS is an independent regulatory body set up to sort out disputes with banks and other financial institutions such as insurers.
The major benefits are that it is free to make an application to the FOS, it is impartial and it can make decisions that are binding on the banks. This means it is worth checking whether you can make a FOS complaint, before issuing full legal proceedings.
If you want to make a complaint to the FOS you will first have to complain to your bank, let the bank investigate and provide a final response to you. The deadline for a FOS complaint is then 6 months from the date of the bank’s final response to your complaint.
It will come as no surprise that the banks can very sensitive to claims and have deep pockets when it comes to defending themselves. As a result, they will always instruct specialist solicitors to act on their behalf against you. The downside is that this means you will face a strong legal challenge; the upside is that the banks are often willing to pay out a sum to settle a claim and stop it going to court. Being able to extract the best settlement deal can be crucial.
If you think you might have difficulties with your/your business’ legal fees, it is worth talking to a solicitor who will work with you to be cost-effective or can offer a range of options.
5. Be realistic, but don’t be afraid!
I have seen a number of claimants fall victim to wanting their ‘day in court’, and then lose, when they would have been better advised to reach a settlement and walk away with some compensation.
Disputes with banks can be extremely personal, but if you are able to take a step back and make decisions with a cool head then it may well work out for the best.
As you will see, there is a lot to consider before making a claim against your bank. However, just because it can be difficult doesn’t mean that you are not due damages for whatever has happened. Inevitably, the best course of action is to get your papers together and take legal advice as soon as possible.