Thousands of businesses face being unable to bring claims against the banks through the courts for alleged mis-selling of hedging products and other complicated derivatives due to statutory provisions that prevent the bringing of claims outside of certain strict time limits. The Limitation Act 1980 provides that no claims can be brought against the banks after the expiry of 6 years from the date of the hedging agreement/contract. Whilst there are limited exceptions to this 6 year rule being from the date of the agreement/contract, where negligence is being alleged against the bank, the exceptions are difficult to succeed upon.
At the present time most businesses are proceeding along the review route set down by the FCA. However, this in itself does not stop time running for the purposes of the Limitation Act. Given that the reviews presently being conducted by the banks in conjunction with the FCA are set to take a further 6 - 12 months, many businesses will find themselves out of the time for the purposes of challenging the hedging product should they be unhappy with the outcome of the review conducted by the FCA.
Businesses are therefore advised to take urgent advice as regards their position concerning limitation and to try and agree a "Standstill Agreement" with the bank before the expiry of the 6 years. This effectively "stands still" limitation to allow the review to be conducted.
By commercial litigation solicitor, Leanne Millhouse