7. 3 VERULAM BUILDINGS
GRAY’S INN, LONDON
WC1R 5NT
TEL: 020 7831 8441
FAX: 020 7831 8479
Chambers@3vb.com
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Rights of Action under FSMA
• s150 / 138D: “private person”
• [almost] “any individual”
• a legal person “unless he suffers the
loss in question in the course of
carrying on business of any kind”
8. 3 VERULAM BUILDINGS
GRAY’S INN, LONDON
WC1R 5NT
TEL: 020 7831 8441
FAX: 020 7831 8479
Chambers@3vb.com
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Rights of Action under FSMA
• Titan Steel Wheels [2010] EWHC 211
• wide meaning: almost any corporate entity
• narrow meaning: “business-like speculation”
9. 3 VERULAM BUILDINGS
GRAY’S INN, LONDON
WC1R 5NT
TEL: 020 7831 8441
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Chambers@3vb.com
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Claims under common law
• advisory duties
• information duties
• regulatory rules ↔ common law
• effectiveness of ‘basis clauses’
10. 3 VERULAM BUILDINGS
GRAY’S INN, LONDON
WC1R 5NT
TEL: 020 7831 8441
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Bailey v Barclays Bank
• Example of factually weak case
arising from rare factual context:
swap novated to company following
tax advice
11. 3 VERULAM BUILDINGS
GRAY’S INN, LONDON
WC1R 5NT
TEL: 020 7831 8441
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Chambers@3vb.com
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Bailey v Barclays Bank
Alleged breaches of COBS
•2.1.1R
•9.2.1R
•10.2.1R
•11.2.1R
12. 3 VERULAM BUILDINGS
GRAY’S INN, LONDON
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Bailey v Barclays Bank
• Cause of action for breach of COBS:
• FSMA s.150 – private person
• FSMA s.150 – not private person
• Incorporation into contract
• Indirect contractual application
13. 3 VERULAM BUILDINGS
GRAY’S INN, LONDON
WC1R 5NT
TEL: 020 7831 8441
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Chambers@3vb.com
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Bailey v Barclays Bank
• Breach of fiduciary duty
• Declaration of unenforceability
under FSMA s.27
14. 3 VERULAM BUILDINGS
GRAY’S INN, LONDON
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TEL: 020 7831 8441
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Chambers@3vb.com
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Bailey v Barclays Bank
• Other issues considered:
• Novation
• Duress
• Unjust enrichment
15. 3 VERULAM BUILDINGS
GRAY’S INN, LONDON
WC1R 5NT
TEL: 020 7831 8441
FAX: 020 7831 8479
Chambers@3vb.com
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Crestsign v RBS
• effectiveness of basis clauses
• common law advisory duty
• common law information claim
• misrepresentation
• quantum
16. 10 May, 2008 20 May, 2008 1 Jun, 2008
15 May, 2008
Internal approval for loan
with hedging condition
21 May, 2008
Introductory phone
re hedging
28 May, 2008
Meeting to
discuss hedging
30 May, 2008
Risk Management Paper
- 4 trade ideas
- breakage costs "substantial"
- "paying interest on debt you do not have"
- no reliance / no advice clause
4 Jun, 2008
Terms of Business for Retail
Clients
- no reliance clause
Standalone Derivatives Terms
- no reliance clause
4 Jun, 2008
phone call
- "paying interest for money
that you have paid back"
4 Jun, 2008
email re final structures
6 Jun, 2008
Trade Call
5 Jun, 2008
C signed Terms
of Business
3 VERULAM BUILDINGS
GRAY’S INN, LONDON
WC1R 5NT
TEL: 020 7831 8441
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Chambers@3vb.com
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17. 3 VERULAM BUILDINGS
GRAY’S INN, LONDON
WC1R 5NT
TEL: 020 7831 8441
FAX: 020 7831 8479
Chambers@3vb.com
www.3vb.com
Crestsign v RBS
• The advice claim
• (1) Did the facts give rise to an advisory
relationship? Yes
18. 3 VERULAM BUILDINGS
GRAY’S INN, LONDON
WC1R 5NT
TEL: 020 7831 8441
FAX: 020 7831 8479
Chambers@3vb.com
www.3vb.com
Crestsign v RBS
• The advice claim
“The disparity in knowledge and expertise and the
respective roles of the two men was such that it was
reasonably to be expected that Mr Parker would rely
on Mr Gillard’s skill and judgment and, aside from the
documents, it would be reasonable for him to do so.”
19. 3 VERULAM BUILDINGS
GRAY’S INN, LONDON
WC1R 5NT
TEL: 020 7831 8441
FAX: 020 7831 8479
Chambers@3vb.com
www.3vb.com
Crestsign v RBS
• The advice claim
• (2) Did the Bank disclaim responsibility for
any advice that might be given? Yes
20. 3 VERULAM BUILDINGS
GRAY’S INN, LONDON
WC1R 5NT
TEL: 020 7831 8441
FAX: 020 7831 8479
Chambers@3vb.com
www.3vb.com
Crestsign v RBS
• The advice claim
“The Risk Management Paper and the two sets of
terms of business were unequivocal; they defined the
relationship as one in which advice was not being
given. They were clearly drawn to Mr Parker’s
attention before the swap contract was concluded.”
21. 3 VERULAM BUILDINGS
GRAY’S INN, LONDON
WC1R 5NT
TEL: 020 7831 8441
FAX: 020 7831 8479
Chambers@3vb.com
www.3vb.com
Crestsign v RBS
• The advice claim
• (3) Had the Bank owed a duty, would it
have been in breach? Yes
22. 3 VERULAM BUILDINGS
GRAY’S INN, LONDON
WC1R 5NT
TEL: 020 7831 8441
FAX: 020 7831 8479
Chambers@3vb.com
www.3vb.com
Crestsign v RBS
• The advice claim
“It seems to me obvious that, viewed at the time and
not with hindsight, any of those four variants carried
with it the unacceptable risk of being de facto “locked
in” to a 10 year transaction period with serious risk
of very high quarterly payments resulting from low
interest rates…”
23. 3 VERULAM BUILDINGS
GRAY’S INN, LONDON
WC1R 5NT
TEL: 020 7831 8441
FAX: 020 7831 8479
Chambers@3vb.com
www.3vb.com
Crestsign v RBS
• The information claim
• (1) What duty did the Bank owe when
giving information about the Swap?
24. 3 VERULAM BUILDINGS
GRAY’S INN, LONDON
WC1R 5NT
TEL: 020 7831 8441
FAX: 020 7831 8479
Chambers@3vb.com
www.3vb.com
Crestsign v RBS
• The information claim
“I resist the fallacious reasoning that because
common law duties and COBS duties are not
coterminous, and because Crestsign is excluded from
the class of persons able to sue for breach of COBS
duties, the banks can owe no common law duty which
happens to overlap with a COBS duty.”
25. 3 VERULAM BUILDINGS
GRAY’S INN, LONDON
WC1R 5NT
TEL: 020 7831 8441
FAX: 020 7831 8479
Chambers@3vb.com
www.3vb.com
Crestsign v RBS
• The information claim
“a duty to explain fully and accurately the nature and
effect of the products in respect of which he chose to
volunteer an explanation, but I do not think he came
under a duty to explain fully other products that
Crestsign might have wanted to purchase but which he
did not wish to sell”
26. 3 VERULAM BUILDINGS
GRAY’S INN, LONDON
WC1R 5NT
TEL: 020 7831 8441
FAX: 020 7831 8479
Chambers@3vb.com
www.3vb.com
Crestsign v RBS
• The information claim
• (2) Did the Bank act in breach of that duty?
No (just)
27. 3 VERULAM BUILDINGS
GRAY’S INN, LONDON
WC1R 5NT
TEL: 020 7831 8441
FAX: 020 7831 8479
Chambers@3vb.com
www.3vb.com
Crestsign v RBS
• The information claim
“I have considered anxiously whether it was adequate
merely to describe them as “substantial” in the Risk
Management Paper, without any further explanation
of what “substantial” might mean in a variety of
unpredictable scenarios…”
28. 3 VERULAM BUILDINGS
GRAY’S INN, LONDON
WC1R 5NT
TEL: 020 7831 8441
FAX: 020 7831 8479
Chambers@3vb.com
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Crestsign v RBS
• The information claim
“… It is in this respect that the banks came closest to
breaching the duty it owed in respect of the
provision of information. But in the end I have
reached the conclusion that the banks gave just
enough information to avoid a breach. .”
29. 3 VERULAM BUILDINGS
GRAY’S INN, LONDON
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TEL: 020 7831 8441
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Kays Hotels v Barclays Bank
Limitation of swaps claims:
•Contract and breach of statutory
duty claims statute barred.
•Arguable that Limitation Act 1980
s.14A extended limitation for
tortious claim.
30. 3 VERULAM BUILDINGS
GRAY’S INN, LONDON
WC1R 5NT
TEL: 020 7831 8441
FAX: 020 7831 8479
Chambers@3vb.com
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Kays Hotels v Barclays Bank
“27. … This is a case where the facts will be important. It is quite right to point out, as
the defendant does, that one is not just concerned with actual knowledge;
constructive knowledge is sufficient under Section 14A(10). However, that section
requires one to enquire into the knowledge which a person:
"Might reasonably have been expected to acquire: (a) from facts
observable or ascertainable by him; or (b) from facts
ascertainable by him with the help of appropriate expert advice which it is
reasonable for him to seek,"
28. That is an objective test but it is a test that has to be considered in the context of
the circumstances applicable to the person in question. In the present case that
involves looking into the degree of Mr Saeed's sophistication, what he had been told
or not told, what his general state of knowledge was in 2008/2009 and what the
more general state of knowledge was at that time, for example in relation to the
anticipated future trend of interest rates. These are all matters that depend on a full
factual picture and mean that the issue is not appropriate for summary
determination.”
