Claims involving a LIBOR element are likely to continue to advance. Deutsche Bank is facing claims by Unitech.The litigation between Property Alliance Group and RBS which involves similar issues to the Deutsche Bank case, is also being followed by the market. It also remains to be seen whether the comparatively recent round of fines for manipulation of forex benchmarks will trigger a similar rash of claims.
The last few years have seen a number of cases involving local authorities or quasi-public bodies in various European countries which have lost significant amounts as a result of entering into complex derivative contracts. It is likely that the court will consider more of these cases in the second half of this year.
Regulatory and other developments
The next six months are likely to be as busy as the first half of this year, and there are some key publications on which much attention will be focused. First, the FCA and the PRA have yet to publish their full final rules and guidance in relation to the new Senior Managers regime, as well as the certification regime and conduct rules. It is likely that firms are still lobbying hard for the changes which are most important to them, and it remains to be seen whether any further substantive changes are made. One issue to watch out for is a possible consultation on extending the certification regime to cover wholesale traders. The regulators have also indicated that they are looking into the issue of how they may reduce the reporting burden on firms in respect of notifying breaches of conduct rules.
The report of the Fair and Effective Markets Review was published on 10 June 2015 and it appears likely to have widespread ramifications. We will consider FEMR's report in the next edition of Financial Markets Disputes and Regulatory Update.
The outcome of the judicial review proceedings brought by Holmcroft Properties Limited may not be known this year, but it raises the interesting question of whether a skilled person appointed by a firm under section166 of FSMA is amenable to judicial review. Some commentators also point to an increased rate of direct appointments of skilled persons by the FCA over the last quarter.
The FCA's Business Plan sets out its plans for market studies and thematic work, and indicates that it will be conducting reviews into areas including culture, the role of appointed representatives, inducements and conflicts of interest, investment and corporate banking, and conflicts of interest in dark pools. This gives the FCA a long to-do list, and many items on it are likely to generate significant interest. The FCA will also be starting preparations for the implementation of reforms to EU financial services regulation, including MiFID II and the new market abuse regime.
A review of the FCA's penalties regime is also expected. Martin Wheatley has recently defended the success of high fines in promoting better culture within firms, so it appears that the FCA will be averse to reducing them any time soon. The recent imposition of record fines on both firms (Barclays) and individuals (Stewart Ford) would seem to confirm that message.
The Consumer Rights Act 2015 may require some careful consideration by financial services firms now that it has been enacted. The FCA has already indicated that it will consider the area of unfair contract terms in light of Part 2 of the new Act, and firms may wish to keep an eye on the content of the Act in relation to provision of services as well.