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some recent banking assignments


Dispute about stolen bank draft

The case revolved around the theft of a series of Bankers Drafts.

The drafts were subsequently paid into a business account in another bank which had been opened by a young man operating as a Sole Trader dealing as a 'Commodity dealer in precious metals and fine watches', and the money was swiftly withdrawn.

We were asked to review the role of the bank.

We identified many aspects where the bank had fallen short, in the opening and the monitoring of the account.

At mediation, the bulk of the total claim was awarded, after allowing for an element of contributory negligence by the client.

What we do in banking disputes

Bank negligence

This case involved an aged and infirm lady living in a care home. She was persuaded to sign a Power of Attorney in favour of the care home manager. Subsequently the manager and his book-keeper moved her entire estate funds into a bond with an insurance company. They quickly broke the bond, paying the redemption penalty, and moved the funds to Switzerland (allowing for generous expenses to them and their wives) where they had been promised returns of 50% per annum!

We were asked to review the role of the bank.

Again we identified many aspects where the bank had fallen short, in the opening and running of the account.

In addition, the bank manager visited the lady, who by this time had had a stroke, and saw her on her own to confirm matters. The bank founded its defence on their record of that meeting and the bank manager's assertion that the lady was of sound mind and full mental capacity.

The decision at mediation returned the bulk of the funds to the estate of the lady, who had sadly since died. The care home manager is in prison and the book-keeper has fled the country.

Negotiating a bank debt reduction

Small business customer of a major UK clearing bank, who had complaints about his bank's conduct in several areas, claiming that some of their actions had contributed to the collapse of his business. He was however under extreme pressure to repay the outstanding debt. Matrimonial home was held as 2nd Mortgage Security for a partnership debt, with the bank taking legal action to repossess the property.

Client contacted Banking Liaison Group. One of our very experienced ex bank managers immediately investigated the circumstances of how the bank debt arose, and the way the bank had taken the security and had dealt with the case throughout. All bank documentation, account statements & correspondence over a 2 year period were reviewed in detail. The resulting BLG report for our client highlighted the ways the normal banking code of conduct had probably been breached, the strengths & weaknesses of the case, and how a negotiation might be handled to gain a settlement without going to Court.

BLG's involvement in a formal meeting with the Bank enabled a settlement of the debt over 12 months to be negotiated, to release the charge on the property. This agreement by the Bank included a discount of over 35% of the total debt & interest outstanding.

This shows how the involvement of BLG, free of the emotional intensity, can assist both Bank & customer in mediation of a long-running issue. Neither the Bank nor the Client wished to spend further money in fees by going to Court in this case, but - prior to BLG involvement - there had been no real dialogue.

Business plan and small firm loan

An applicant for a franchise needed to obtain finance. The franchisors provided sample estimates of what a franchisee could potentially earn in year 1,2 and 3 - but they did not provide cash flows and forecasts. Nor did they provide the words for a business plan that a bank could work with.

BLG met the potential franchisee, and the franchisor. We then revised the suggested volumes in line with what the franchisee was comfortable with. Following this meeting we prepared the full business plan - with 2 years' Profit and Loss and cash flow forecast - knowing what aspects the bank would require to be covered in the submission.

The bank were then keen to progress the deal and arranged a small firm loan very quickly.

More on small firm loans.


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