Is my bank retaliating?

I run a logistics company and recently claimed compensation from my bank through the Financial Conduct Authority (FCA) as I strongly believe we were a victim of mis-selling interest rate swaps. I am extremely concerned because we have since been informed by the bank that our overdraft has been considerably reduced. This was obviously in separate correspondence, and no mention is made of the compensation we are seeking, but surely it is not a coincidence. Is there anything we can do to challenge the bank’s behaviour?

Answer:

Your suspicions could be right. If your complaint about mis-selling is the only reason that the bank has reduced your overdraft you may have a remedy. Overdrafts are “on demand” facilities. This means that the bank has a wide power to call in or reduce an overdraft at any time.

The bank can exercise this power for any commercial reason even if it is not in your interest to do so. However there is an implied term in your contract with the bank that the power to call in or reduce the overdraft will not be exercised capriciously or irrationally.

If the decision benefits the bank commercially that would be sufficient reason. If, however, the only reason was because of your complaint to the FCA, this would be irrational or capricious and accordingly in breach of your contract; however, you would need to prove this. Start by asking the bank to state its reasons in writing. Once you have this, make a Data Protection Act request accompanied by the correct fee. You may then begin to ascertain if there was any other rational reason for the reduction of your overdraft. If the bank pays you basic compensation for the swap mis-sale it is important that you do not accept this as final compensation and that you reserve your right to claim any consequential losses for the unnecessary expense your business incurred.

Finally, if you have given a personal guarantee for the overdraft take specialist advice at an early stage.

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Patrick Selley. Keystone Law, 48 Chancery Lane, London, WC2A 1JF.

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