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September 22, 2006

Without Prejudice

What does it mean and how does it work?

The NZ law firm, Philips Fox, has reported on a recent House of Lords ruling that clarifies how the term 'Without Prejudice' works.

Lawyers will sometimes state that a letter or discussion is ‘without prejudice’. Such communications are not admissible in court and are intended to encourage litigants to reach an agreed settlement. However, whether a particular communication is protected depends on the intention of the parties. Just adding the words ‘without prejudice’ does not automatically give the communication privileged status. Nor do the words ‘without prejudice’ need to be stated. To be ‘without prejudice’ there must be a dispute and the communication must seek a compromise or have some bearing on the settlement negotiations.

In Bradford & Bingley Plc v Rashid, the House of Lords considered the ‘without prejudice’ rule in the context of a debtor’s acknowledgement of a long overdue debt.

Bradford & Bingley wrote to Mr Rashid about an outstanding loan asking for an offer of repayment. Mr Rashid replied, acknowledging that he owed the debt, but said he could not pay immediately though he might be able to start repayments two or three years later. The bank was not satisfied and issued proceedings to recover the debt. Judgment was sought because of Mr Rashid’s acknowledgement of the debt. However, Mr Rashid argued that the acknowledgement was protected by the ‘without prejudice’ rule and sought to have his letters excluded from evidence.

It was ruled that ‘without prejudice’ did not apply to open communications designed only to discuss the repayment of an admitted debt, rather than to negotiate and compromise a disputed debt. Mr Rashid’s correspondence treated the debt as an undisputed liability and dealt only with whether and when and to what extent he could meet that liability. Since the debt was admitted, there was no dispute and therefore the communications could not be ‘without prejudice’.

August 24, 2006

Basic bank (personal) accounts

Not an area which we cover, as we are a business specialising in business banking issues.

But anyone interested in these may like to know that the FSA has published "Basic bank accounts - your questions answered".

Well, there's a thing

Venture Finance have released a survey suggesting - surprise, surprise - that UK SMEs believe high street banks are not flexible enough to support socially minded businesses - 75% feel that banks lack the vision to work with entrepreneurs who take an ethical approach to business.

We doubt this - we think banks will want to do whatever deals seem safe and profitable. But hey, we'll give Venture Finance a link.

August 22, 2006


HSBC have announced they are opening 50 commercial banking offices in edge-of-town business parks. The first will be in Swansea.

Barclays' share of new business accounts is said to have risen to 24% in the past year.

August 15, 2006

"Special lending services"

That's the euphemism for bank departments which deal with what the banks see as problem borrowings. Often the bank will want to levy a monthly charge for this extra attention, which may or may not actually be required.

We've recently met several clients who had this blessing bestowed upon them - not that we could see much wrong with their borrowings. Was it a misunderstanding by the bank? Did it reflect some internal politics?

Some of these banks' departments are briskly efficient. Some are - let's say - not too good.

Among our members we have more years of bank lending experience than we really care to count. So we can give you a second opinion, and talk with you about whether you really do have a problem, and what to do. We can be a friendly and confidential sounding board.

Perhaps most immediately, one enquirer said that just by talking with him we'd lowered his blood pressure!

Wipe your hard disk before recycling your PC

That's the warning, as PCs from council recycling centres sometimes end up in Nigeria. Fraudsters in Nigeria can then find internet banking data stored on recycled PCs. Bank account details belonging to thousands of Britons are being sold in West Africa for less than £20 each.

Simply deleting files is not enough. Users should instead use a programme to wipe their hard drive before they sell or give away their PC, a process which over-writes what is already contained on the drive.

Alternatively, people should remove their hard drives before they give away their computers.

July 27, 2006

"Don't ignore the bank"

This is the suggestion from a writer in The Telegraph.
Andy Collins is a partner at corporate finance firm Results International Group. He says it's vital for all businesses to stay close to their banks and bank managers. "Treat the bank like you would any important client," he says, "and negotiate an overdraft facility when things are going well and you don't actually need it." While he agrees that bank managers do tend to move around a bit, that's all the more reason for keeping in contact and know who their number two is and who might be about to replace them.
The principle is sound. The downside of course is that you'll pay an overdraft fee for a facility you may never use. And not every manager will sanction an overdraft without a cash flow forecast showing it's likely to be needed.

Incidentally, more and more clients are commenting on the rapid turnover of their bank relationship managers. One business we saw recently said it had had five relationship managers in five years. This doesn't help relationship building.

Soca looks at Hawala banking

The Hawala system exists outside traditional banking channels, with the transfer of money based on a network of informal dealers known as hawaladars.

Hawala is used by millions of immigrant workers as a legitimate form of remittance transfer, but the system is being increasingly manipulated by organised crime and, in smaller volumes, by international terrorists, say UK officials reported in the Financial Times.

"We have identified as a high-risk area dedicated money-laundering 'controllers' who use the Hawala system to exploit the proceeds from the illicit drugs trade," said David Armond, head of Soca's Proceeds of Crime Unit. "We believe that the people who need to be targeted are the hawaladars who support major drug traffickers," Mr Armond told the FT.

July 18, 2006

More firms facing critical problems

This is the oucome of a survey by a firm of insolvency practitioners - well they would say that, wouldn't they.

The research tracks firms with sustained trading losses, weak balance sheets, mounting debts, declining turnover, and which sell assets to let the business keep going.

We can sometimes help.

Commission wants Single Euro Payments Area

The launch of the euro in 1999 has had almost no impact on banking costs and services in the 12 countries of the eurozone, a crushing disappointment to those who hoped that a single currency would smash down the barriers, reports The Telegraph.

Banking fees remain eight times higher in Italy than the Netherlands, and transfers from Portugal and Greece to other eurozone states are still very expensive, even though they use the same currency.
A three-month probe by the Commission found that banks made some €250bn to €275bn in profits each year, helped by disguised barriers and the difficulty of switching banks..
"Pre-tax profits in Britain, Ireland, Denmark, Sweden, Finland and Spain have all averaged over 40pc annually", we are told - does anyone know what this means?

EU criticises credit card fees

Neelie Kroes has accused EU banks and card companies of perpetuating a cosy cartel, with the collusion of governments, in setting payment fees.

The Commission said credit card fees served as a "tax" on consumers, costing the EU economy up to £70bn a year, reports The Telegraph.
Payment charges vary by up to 650pc for businesses, and up to 100pc for ordinary consumers across the EU's 25 states.

Mrs Kroes said: "Banks charge 2.5pc on every retail purchase made with a payment card, and the profitability of this sector has been abnormally high for a sustained period of time. Large price differentials within the EU clearly show that market forces are not yet working at full strength."

July 7, 2006

Woolwich to leave the High Street

Astonishing that Barclays never integrated its systems with Woolwich, and left competing branches open so close to each other.

It seems to us that Barclays never got best value for its £5.4bn purchase back in 2000. Completion of the purchase is when the work starts, but Barclays didn't seem to know what it wanted to do with the Woolwich. So it did very little. Maybe internal politics intervened.

Barclays denies the Woolwich was a bad fit commercially. But they certainly haven't made the most of it.

Now Woolwich customers will become customers of Barclays. We'd be surprised if that pleases all of them.