GROUP ACTIONS – INSIGHT FOR THE FINANCIAL SERVICES SECTOR
CD: To what extent has the financial services sector been impacted by group actions over the past 12 to 18 months? What levels of activity are you seeing?
Hawthorne: The most significant group actions by value are the shareholder actions against RBS and Lloyds concerning capital raising activities during the financial crisis. While these are very large and important cases for the banks involved, they do not represent a market or systemic exposure and they are rooted in the extraordinary circumstances of the financial crisis, as opposed to ongoing or business and usual practices. The more usual means by which banks become exposed to mass litigation is through multiple similar claims being brought individually, where a relatively small number of claimant law firms and counsels make the running in formulating new arguments and avenues of attack. PPI and IRHP mis-selling claims are the obvious examples. In both cases, the regulator has intervened so as to require banks to set up redress schemes for affected customers. The existence of regulator-supervised redress schemes has probably prevented group litigation that would otherwise have been brought.
Jul-Sep 2016 issue
Pinsent Masons LLP