Case Studies

Significant Judgment Opens Court Doors to Hedging Claims

Many consumers who have been mis-sold hedging products previously thought that they could not make a claim because they were out of time.

The traditional causes of action, when making a claim at Court are pursuant to:

-       section 138D of the Financial Markets and Services Act 2000; 

-       breach of contract;

-       negligence.

Generally, for all three, a claim must be brought within 6 years of the mis-sale of the hedging product, which will usually be the day on which it was sold.  In addition, in respect of negligence, a claim must be brought within 3 years of knowledge of the negligence, or when the consumer should have reasonably acquired knowledge of the negligence. 

As a result of the above, by the time the FCA announced, in June 2012, the nature of the hedging scandal, many claims were already out of time and many have become out of time since.

This was until the judgment was handed down on 30 July 2015 in the case of Suremime Limited v Barclays Bank Plc [2015] EWHC 2277 (QB) which has opened the door for consumers previously unable to bring a claim at Court.

Suremime Limited were sold a Structured Collar by Barclays on 11 June 2008 and they issued a claim at Court, within time, relying on the usual causes of action, above.

However, in the course of the proceedings, Suremime Limited issued an application to rely upon further causes of action.  Barclays (along with HSBC, Lloyds and RBS) had agreed with the Financial Conduct Authority to review the sale of all hedging products, sold since 1 December 2001, to all customers who were deemed to be “unsophisticated”.  Suremime argued that Barclays owed a contractual duty to review the sale of the hedging product, in accordance with the principles of the FCA Review, as well as a duty of care in tort.  The latter would mean that if Barclays did not do so, they could be sued for negligence.

Thirdly, Suremime argued that Barclays’ duty in the FCA Review, was similar to that of a solicitor administering an estate.  The case of White v Jones [1995] 2 AC 207 provides that damages can be obtained from a solicitor, in certain circumstances.

The Court rejected the application in respect of the claim in contract as a result of the lack of consideration (meaning, something of worth) passing from Barclays to Suremime.  This is necessary to form a contract.

However, the Court allowed the application in respect of both of the other claims.  This means that all victims of hedging products, who previously believed they were statute barred are now, not.

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