With the ongoing controversy over Libor, banking disputes are once again in the headlines. Gone are the days of bowler hatted bank managers and the Natwest piggy bank collection; modern banking is a transnational, automated industry where a single sneeze leaves everyone at risk of catching a cold. Uncertainty and unreliability can even infect the numbers under scrutiny, with face value figures proving to be altogether more ambiguous when in dispute.
In such an intricate industry it is not surprising to see that banking disputes are on the increase: institutions can find themselves in dispute with clients, employees and regulators. Practices ranging from private equity, hedge funds and asset management are increasingly under scrutiny from regulators, legislators and investors keen to discover what really happens to their money in the hands of finance professionals. This is not always easy in an industry which relies heavily on discretion and trust to create long term, stable investor/manager relationships.
Anticipating and preparing for possible disputes, therefore, is vital to ensure that relationships are preserved and trust between parties nurtured. It can be thought of as a form of risk management, with the same scope for foresight and contingency planning as might be applied to assessing credit or market risk. For anyone thinking that relationships are a bit ‘woolly’ for rigorous risk management, rest assured that the impact on a company’s bottom line from relationships gone sour is crystal clear.

Oct-Dec 2013 issue