Interest Rate Swap mis-selling cases.

Expert Evidence has been involved in a number of cases involving the mis-selling of Interest Rate Swap Agreements (‘IRSAs’) both to private individuals and also small and medium sized enterprises (‘SMEs’). The IRSAs come in a whole range of different types from Collars, Caps and Fixed Rate agreements which use the derivative markets to produce the results over a fixed period of time. In the majority of cases the agreements do not match the time period of the underlying loans they were seeking to reduce the risk on. In general the agreements come under the legislation relating to investments and so the Financial Services Authority Conduct of Business Rules apply.

Internet banking and vishing attacks – dispute with bank concerning responsibility for fraudulent payments.

The concern here was the duty of care expected from banks when fraudulent payments had been made from a customer’s internet banking system after it had been compromised by external fraudsters (‘vishing‘) obtaining access to genuine profiles.
Our expert reviewed the papers and concluded it was relevant for them to discuss with their bank the level of care a bank should take when highly unusual transactions pass across a business account and the timely action the bank should take to minimize any loss.
This is becoming an increasing problem both for customers and banks. Customers need to be aware to the internal bank procedures which are aimed at reducing the risk of such frauds being successful. It is not just the customer who has responsibilities.

Tax Case – Compulsory Purchase Order.

A compulsory purchase order compensation case where the claimant sought not only the price but the Capital Gains Tax (‘CGT‘) arising on the forced sale, because in a normal sale, the tax could have been avoided. Overturning previous case law authority, the Upper Tier Tribunal agreed that in theory the CGT is claimable provided the loss is shown, i.e. the statutory roll over relief is not available and the tax could have been avoided or passed on to the purchaser.

Tax Case – Stamp duty or not? (settled)

A Professional Indemnity Insurance (‘PII‘) claim against advisers for a reclaim of stamp duty reserve tax. This can be reclaimed within 6 years if the contract fails. However, the advisers incorrectly paid stamp duty, which is harder to reclaim and has a 2 year time limit in any event. Once it became clear to the lawyers what had occurred the case was resolved.

Inappropriate actions by offshore trustees on behalf of beneficiaries.

Over the years many clients have used the facility of a trust structure usually based in an offshore location. It is important that the Trustees act in a fiduciary capacity for all the beneficiaries and frequently some of the beneficiaries believe that the Trustees have not acted appropriately. At Expert Evidence we have advised on how Trustees have undertaken their role and whether a case exists for compensation of those which have been disadvantaged. It frequently involves the investment actions taken by Trustees on the funds held in the Trust. Consideration of the investment environment and basis of the investment decisions is highly pertinent to the consideration of the evidence.

Professional Indemnity cases brought against solicitors, surveyors and independent financial advisors (‘IFAs‘).

Given the traumas of the investment markets over the 2007-2009 period, a number of clients and banks have lost substantial funds which are considered caused by the actions by professionals who have provided advice. Expert Evidence has considered a number of cases on behalf of the Banks and also Professional Indemnity insurers and determined if there is a cause for action or not. Professional advisors can include Solicitors, Surveyors, Independent Financial Advisors and Investment Managers which need to act in an appropriate fashion to avoid charges of negligence. Consideration of the investment environment and basis of the professional decisions is highly pertinent to the consideration of the evidence.

Derivative mis-selling cases.

Derivatives, including Puts , Calls, Futures, Options and complicated structures are frequently provided as a risk mitigation strategy to clients. While they may also have substantial benefits, sadly they frequently carry other risks which may result in financial loss in certain circumstances. However it is important that clients understand what they are doing and the risk associated with the investment instruments provided. In many cases this would require the clients to be sophisticated investors and it is required that the providing financial institution ensures that this duty is carried out correctly under the rules. Expert Evidence has advised on a number of cases where the clients have realised substantial losses and the determination of the appropriateness of the strategy proposed needs to be considered.

Contract for differences cases.

Contracts for Differences are much used investment instruments due to the ease of dealing, ability to gear the exposure and the favourable taxation treatment. As a result many clients have chosen to deal through this medium. However they also can have additional risks particularly as the liability under the management agreement can be very substantial. Where there have been major movements in the underlying stock market, so clients have sometimes found that the risk level has been under-estimated and returns have not met their expectations. Insider dealing and normal investment requirements for clients still apply.

A case which was brought against a firm of accountants which had been involved with a client who had taken out a multi-currency mortgage.

Multi-Currency mortgages have been popular with some clients due to the lower interest rate environment for a number of other of the international traded currencies particularly the Swiss Franc, Yen and Euro. At Expert Evidence we have been requested to provide advice on the appropriateness and suitability of the product as well as the on-going supervision of the mortgage loan during its life. Once again the products carry their own risks particularly in the area of currency exposure which clients need to appreciate and can cause significant loss.

Situation where a client had provided an order which was misinterpreted by the Investment Manager.

The relationship between a bank and their clients can take many forms and usually involves a specially appointed person to represent the financial institution with the client. This can lead to a high level of service but it also has got risks where a Relationship Manager misinterprets a client instruction. The result is that an order may be not executed as a client may have required and when substantial loss occurs the situation can be examined with greater scrutiny.

Investor Classification.

Expert Evidence has been involved with a large number of cases which have primarily been determined by the investment sophistication of the clients and whether the work conducted by the financial institution was “suitable” and “appropriate” as required under the FSA Conduct of Business Sourcebook. The UK regulatory environment has strict rules determining the way that investors are categorised into Retail and Professional investors at the outset of a relationship to provide investment services. Expert Evidence has advised on a range of situations involving Unit Trusts, Structured Products, Interest Rate Swaps and Derivatives to determine the knowledge level of the underlying clients and the investment institutions responsibilities.

International Cases.

Expert Evidence has a wide international experience and has advised on cases being heard in England, the offshore islands (being Jersey Guernsey and Isle of Man), Ireland and also the Caribbean, the Americas, the Middle East (including the DIFC), and Australasia. Each jurisdiction has its own regulatory environment as well as the requirements on experts giving evidence to their courts. Expert Evidence is pleased to have a wide range of experts familiar with all the above, after all banking if often an international and global activity.

Offshore Clients which had a Portfolio and were represented by Offshore and Onshore Banks, Investment Advisors and Managers.

It is frequently the case that clients will have their investment account with an offshore bank although the account will be managed and/or advised by managers in one of the world’s main financial centres. This is intended to provide the benefits of tax efficiency yet also that the managers are near the heart of the financial community. In some cases the clients will have their custody arrangements in a third location and also the facility of onshore bank accounts and credit cards for their day-to-day expenditure requirements. Whilst highly beneficial in theory, these arrangements have been seen to cause issues for some clients and in a minority of cases they have believed that this will give them a cause for action. Expert Evidence has advised in a number of cases where problems have been brought to light and sought to advise both the banks and clients on the merits of the case.