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On 3 July 2020, the Court handed-down judgment following a trial of two preliminary issues arising in a claim against Lloyds Bank regarding the bank’s review of the sale of interest rate hedging products.

In 2012, the bank reached an agreement with the FCA whereby it agreed to set up a process for reviewing the sale of certain interest rate hedging products. In accordance with the terms of that review process, the bank invited Mr Davis to participate and he accepted. The bank duly undertook a review and, as a consequence, offered Mr Davis some redress. However, Mr Davis was unhappy with the review and the amount of redress that was offered to him.

Since Mr Davis was not party to the agreement between the FCA and the bank, he could not bring a claim under that agreement. Also, in Elite Properties v Barclays and CGL v RBS the Court of Appeal had held that banks did not owe to their customers a duty to comply with the review process, in contract or in common law, and therefore he could not bring a direct claim against the bank in contract or tort. 

Instead, and in a bid to avoid the consequence of those decisions, Mr Davis framed his claim as a breach of statutory duty claim. In particular, he argued that he had made a “complaint” (within the meaning of the DISP Chapter of the FCA’s Handbook) and the bank owed him a statutory duty to consider the “complaint” in accordance with the terms of the review as agreed between the bank and the FCA. In particular, Mr Davis relied on DISP 1.4.1 R of the FCA’s Handbook (assessing complaints fairly, consistently and promptly) to argue that the bank was obliged to comply with the terms of the review process agreed with the FCA and that failure to comply was actionable as a breach of statutory duty. 

The Judge rejected this argument and, as result, dismissed Mr Davis’ claim. First, she decided that Mr Davis, in accepting the offer to participate in the review, had not made a “complaint” within DISP. In any event, she held that the DISP rules did not require the bank to assess a “complaint” in accordance with the review process as agreed between the FCA and the bank.

Javan Herberg QC and Simon Pritchard acted for Lloyds Bank.

A copy of the judgment is available here.

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