Welcome to the third edition of the On the Financial Services Horizon newsletter – a regular update on upcoming cases and anticipated regulatory developments affecting the Financial Services sector by the DLA Piper Banking and Finance Litigation team.
Cases to watch
- Wall v RBS – is the bank entitled to an order requiring Mr Wall to identify the third party funder funding his case so that the bank can make an application for security for costs against the funder? Due in the Court of Appeal on 14 or 15 March
- National Bank Trust v Yurov – is the new owner of National Bank Trust, Otkritie Holding, entitled to US$830 million outstanding on non-performing loans which its former directors and shareholders allegedly concluded in breach of their duties to the bank? A nine week trial is due to start in the Commercial Court after Easter
- From 7 March the FCA’s conduct rules will apply to all staff not within the Senior Managers Regime (SMR) or Certification Regime. In practice this means that the only employees not expected to comply with conduct rules will be ancillary staff who perform a role which is not specific to the firm’s financial services business
- New rules on requesting and providing regulatory references for certain roles and functions under the SMR and Senior Insurance Managers Regime will come into force on 7 March. Roles affected include senior management functions and significant harm functions
- The FCA is expected to make a further announcement about its proposed rules and guidance on the handling of PPI complaints in Q1 of 2017
- The Criminal Finances Bill is expected to receive royal assent in the Spring. Read more about The Criminal Finances Bill
- HM Treasury’s consultation on the implementation of the revised PSD2 closes on 16 March. Read more about HM Treasury's consultation the implementation of the revised PSD2
Cases to watch
- Libyan Investment Authority v Societe Generale & Ors – the sovereign wealth fund is suing Societe Generale, Walid Al-Giahmi (a Libyan businessman) and Leinada (a Panamanian based company which Al-Giahmi controlled) over five disputed trades, including derivatives, worth $2.1 billion. The fund alleges that the trades it entered into were the result of a fraudulent and corrupt scheme. The trial, which is scheduled to last 13 weeks, is due to start on 1 May
- Dexia Crediop SpA v Comune di Prato – an appeal against a decision that six interest rate swaps documented under ISDA standard forms were null and void because the bank failed to comply with mandatory Italian rules requiring it to give the defendant local authority written notification of its right to withdraw from each swap during a seven day cooling off period. The Court of Appeal is expected to hear the appeal on 8 or 9 May
- RBS Rights Issue Litigation – trial on liability due to commence on 15 May
- UBS AG (London Branch) and Anr v Kommunale Wasserwerke Leipzig GMBH and Ors – the bank is appealing against a decision that it was not entitled to approximately $600 million under a number of collateralised debt obligations which it had entered into with the defendant municipal water company in 2006/7 and on which the defendant had defaulted in 2008. The bank was held liable under the law of agency for a bribe paid to the defendant by an intermediary despite the bank’s assertion that it knew nothing about the bribe. The appeal is expected be heard by Court of Appeal in May and should take at least two weeks
- The FCA expects to consult in early Q2 2017 on Handbook changes to implement PSD2
- The Bank for International Settlements is due to launch a new global code of conduct for foreign exchange markets. Both the FCA and the BoE have emphasised the importance of compliance with the proposed code
- Member States must introduce the changes required by MLD4 into their domestic legislation by 26 June 2017
- The Revised Wire Transfer Regulation (which is directly applicable in Member States of the EEA) will apply from 26 June. The regulation imposes further “know your customer” requirements for payment services providers
- The FCA intends to publish an interim report on its market study into competition in the mortgage sector in the summer
Judgements expected soon
- Supreme Court – AIG Europe Limited v Woodman & Others – how should the words “in a series of related matters or transactions” within the aggregation clause of a professional indemnity policy be construed?
- Supreme Court – FCA v Macris – what amounts to “identification” for the purposes of s. 393 of FSMA 2000? Should the FCA have given Mr Macris third party rights to make representations on matters set out in a final notice even though the notice did not refer to him by name? Read more about FCA v Macris case
- Court of Appeal – Rosserlane Consultants v Credit Suisse – in circumstances where a bank enforced its rights under a participating agreement and exercised a right of forced sale over the claimant’s business should it be subject to an implied term requiring it to exercise reasonable care to obtain the best price reasonably available?
- Supreme Court – Lehman Brothers Limited (In Administration) v Lehman Brothers International (Europe) (In Administration) – the Lehman Brothers International (Europe) (LBIE) administration is unusual in that after providing for all debts proved in the administration there will be a large surplus. This has resulted in a number of applications seeking the courts’ directions on the priority in which the surplus should be distributed. One such application, known as Waterfall I, was heard by the Supreme Court in October last year and judgment is awaited. Amongst other issues, the court will decide whether certain subordinated debt payable by LBIE ranks ahead of claims to post insolvency interest and non-provable claims. Chris Parker of DLA Piper UK LLP acted for Lehman Brothers Limited