Banking Law is a complex one that requires specialist solicitors with total understanding of commercial banking transactions from both borrowers and lenders.

Multi currency or syndicated bank loans require solid legal advice. Where step-in rights, covenants, co-ordination of rights and other obligations need to be questioned a solicitor in banking law is necessary.

Much has been said about bank charges and although such matters may not come under 'banking law' as a specialist banking law solicitor would argue, the average consumer would think it is related.

Unfair terms are legally unenforceable.

On April 5 2006, the OFT (Office of Fair Trading) concluded that bank charges over £12 for default are automatically presumed to be unfair based on the Unfair Terms in Consumer Contract Regulations. These are legally unenforceable.

Does this mean banks cannot enforce charges over £12?

What of bank charges below £12?

Bank charges below £12 may well be unlawful but the OFT will only take enforcement action for charges above £12, lots of £10 bank charges can easily stack up in the banks favour and be too small for the consumer to take action.

There is an example of this on www.bankcharges.info

"you exceed your credit limit by £15.98, most banks will send a letter charging £39, they may also impose a £28 monthly unauthorised overdraft fee, and will almost certainly levy unauthorised interest at over 30% per annum. That's a mark-up of over 419%. Sound fair? "

There are a few individuals that have successfully recovered a large amount of bank charges and the 'cat and mouse' game between banks and customers is spreading.

Some banks don't want to go to court and will attempt to reach an agreement, whilst others will not budge until the matter goes to court.

There have been cases when an individual is prepared to go to court irrespective of costs, simply as a matter of principle and the bank has remained in the same posture right up to the last minute and settled out of court.

We have yet to see the legality of bank charges be ruled on by a senior UK court, but if bank charges are found to be 'penalty' or 'unfair' charges they will not be enforced.

If you are unsure how many charges you have been forced to pay within the last few years, you are entitle to demand this information from your bank under the Data Protection Act 1998 (DPA) for a cost not exceeding £10.

Once you have received this information and you feel it is excessive, as a solicitor for advice. If you do not receive a response from your bank within 40 days, lodge a complaint with the Information Commissioner.

Information Commissioner's Office
Wycliffe House
Water Lane
Wilmslow
Cheshire
SK9 5AF

Ashfords has the largest specialist corporate finance and commercial team west of Bristol. It has an international client reach and London delivery through serviced office in Northumberland Avenue, Trafalgar Square. Our position as a heavyweight regional law firm, requires a dedicated finance practice and our finance unit operates as part of the strong Exeter Corporate team acting for banks, government agencies and corporates on some of the most complex and innovative financing transactions in the region. Our expertise includes acquisition finance, secured lending, structured finance, syndicated lending, project finance, trade finance, asset finance and restructurings. Our goal is to be pragmatic and commercial in providing effective and quick service.

Banking law is a very specialised discipline. Clients require expert advice, particularly in delicate matters of litigation. Our Banking litigation team specialises in high value, complex matters. We provide three key services in this area, asset recovery, general banking litigation and banking law advice.

In Wright v HSBC [1] , the customer, Mrs Wright, claimed damages from HSBC (the Bank) for misrepresentation, undue influence and duress and a failure to give proper advice in relation to the cancellation of a life insurance policy. The customer and her husband had an unsatisfactory borrowing history at the Bank with whom they had taken out a mortgage and overdraft facilities.

Mr and Mrs Wright met with a financial planning manager from the Bank, with the aim of reducing their outgoings. This resulted in a restructuring of their borrowing, with their joint life insurance policy being cancelled and replaced with a pension plan with insurance. The Wrights subsequently complained to a senior compliance officer for the Bank that they had been pressured into setting up the pension plan. The Bank concluded that the financial planning manager had not mis-sold the product to the Wrights, but offered to settle the pension term insurance claim at approximately £500.

Mr Wright died that month, and the following month a representative of the Bank met with Mrs Wright to discuss her indebtedness. During the meeting, the settlement of the claim with the Bank was discussed, as was the possibility of Mrs Wright selling her home and purchasing a smaller property. Mrs Wright subsequently accepted the Bank's offer, on the condition that it provided her with a mortgage on the new home she was purchasing, and overdraft facilities. When she then began to incur further debt, she claimed that she had not been in a fit state to make any decisions at the meeting with the Bank following her husband's death, and claimed that the settlement agreement should not be binding.

The High Court rejected all of her claims and held that the Bank had acted properly towards Mrs Wright throughout. The Bank had been entitled to demand the money owed by the Wrights, and the Court held that had it done so, it would have been well within its legal rights. However, the Bank did not put the customer under pressure (owing to her vulnerable position following the death of her husband), nor did it make it a condition of continued lending that Mrs Wright give up her claims. Under the 'sensitive hand' of the senior compliance officer, the Bank sought a mutually agreeable way forward. The Bank had also encouraged Mrs Wright to seek independent legal advice in connection with the settlement agreement, but she had not done so. The judge held that the facts did not support a finding of undue influence or duress.

The Bank's success in this case is a reminder of the need for banks to tread carefully when seeking to safeguard their commercial interests against debtors, particularly vulnerable ones. Many customers in financial difficulty will require sensitive treatment and any claims should be dealt with diplomatically, even where the bank is within its rights to pursue more direct methods of recovering the debt. Getting the balance right is not easy, and, as this case shows, even where banks act ethically litigation may be unavoidable.

The position for mortgage lenders may shortly become even more delicate. A new bill introduced to Parliament in May – the Regulation of Mortgage Repossessions Bill – is intended to assist responsible borrowers who default on their mortgage repayments owing to circumstances beyond their control, for example through unemployment or ill health. Whilst the Bill may not make it onto the statute book (Parliamentary time may not allow it) some of the proposals are radical and include:

• a pre-action protocol for mortgage repossessions

• taking a number of factors into consideration before a repossession order is made, including any irresponsible lending, the effect on children of a forced repossession, the duration of the occupation, and the level of equity in the property.

If the Bill becomes law, lenders will need to adjust their current policies and practices. Watch this space.

[1|2006] EWHC 930 (QB)

Whether as a borrower seeking funds or a lender making funds available, be it as syndicated or single bank, single or multi-currency or term, revolving credit or overdraft funding, MacRoberts has the experience and expertise to deliver the sound legal advice required.

In acting for lenders, we know from extensive practice that skilled advice is required from the outset of any possible transactions on issues such as the legal and other due diligence appropriate for the transaction, the appropriate method of securing debt, financial and other necessary covenants, co-ordination of rights and obligations with those of other lenders, step-in rights in project finance, events of default and cancellation of facilities and enforcement of securities.

Borrowers, on the other hand, are most concerned with business flexibility and certainty of funds: funds available when needed, loan and security documentation that does not unduly restrict business activity, ongoing information provided only when reasonably required by the lender, commercial confidentiality guaranteed and sensibly drafted repayment triggers and restrictions on a lender’s ability to call for cancellation or repayment in the event of default outside the borrower’s control.

MacRoberts’ clients take for granted the technical excellence of our Banking Group. We seek to ensure in addition that every banking transaction carries with it a distinct element of added value and a sophisticated appreciation of commercial reality. We have a flexible and co-ordinated approach which stems from our readiness to tailor project teams from the firm’s wide range of disciplines to deliver precisely the right result for our clients.

We work with banks and other financial institutions, as well as their customers, in all kinds of banking and financial transactions including project finance. Our common sense approach and friendly, practical advice, based on sound, experienced, technical and commercial knowledge are the reasons why clients come to us and keep coming back.

The intricacies of banking law demand not only exceptional legal knowledge but also the highest level of commercial understanding. Lawyers in MacRoberts’ Banking Group offer clients the expert advice they require, either as lenders or borrowers, across a whole range of commercial banking transactions.