David Greene analyses the growing number of class actions in the UK banking sector, and suggests how banks should prepare for them, in a new article written for Thomson Reuters Regulatory Intelligence.

Claims against banks by existing or former clients for loss arising from bank conduct are nothing new. Due to clever online frauds and stricter regulation, this is a fast-developing area of law. One example is the recent development of the Quincecare (Barclays Bank Plc v Quincecare Ltd ([1992] All ER 363) duties, which were reviewed last year in a number of courts, including at the High Court in Federal Republic of Nigeria v JPMorgan Chase Bank NA [2022] EWHC 1447 (Comm.).

Recent press headlines suggest that there is a new trend for claims to be brought against banks by large groups in class actions fuelled by third-party funders.

Lying behind the headlines is a piece of research undertaken and reported by law firm RPC, which suggested that there are 109 class action lawsuits being brought against the major UK banks in the FTSE 100. This includes proceedings brought in the UK and the United States. The UK proceedings are just a small part of the overall picture, accounting for only six of the 109 lawsuits.

What is a class action?

In the United States, the term has tended to dominate public perception of the litigation process. Class actions can be huge, ground-breaking and newsworthy. The lawyers associated with them can be controversial, brash and loud, feeding off the media frenzy that may follow them, but the vast majority simply get on with the job. A typical class action in the United States relates to a state or federal issue, ranging from mass tort to price-fixing and securities fraud.

The action may be issued in the state or federal courts. The procedure in the latter is largely contained in Rule 23 of the Federal Rules of Civil Procedure.

The normal procedure for claims follows the usual opt-in procedure, which is that if you wish to start proceedings, you issue in your own name. The U.S. class process works on an opt-out procedure; if the class is certified by the court, then everyone within the class and bound by settlement or judgment is included unless they opt out. Unlike most jurisdictions, the losing party does not usually have to pay the winning party’s costs — that is, there is no cost shifting. This makes the certification process all the more important and hard-fought.

The reputation of the U.S. class process and litigation is generally unfavourable on this side of the Atlantic. Considerable press attention has been paid to the more fringe claims, such as the action over jelly beans for containing sugar and the claim against Subway for “foot-long” sandwiches that are less than 12 inches.

Perhaps the most infamous claim was the “hot coffee” claim against McDonald’s, in which the damages awarded amounted to $2.9 million. Many of these claims are dismissed at an early stage, and there was more to the “hot coffee” claim than the press suggested, but the headlines define its reputation.

That reputation has undoubtedly affected European views of class actions. The description itself remains contentious, with the European Commission and domestic regulators using any description but “class action” for “collective actions” or “group litigation”.

You can read David’s article in full on Thompson Reuters website (subscription may be required)


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