(Bloomberg) — Banks in the UK are embroiled in the highest number of lawsuits in a decade in a trend that shows no sign of slowing down.
Almost three new cases involving financial services firms were filed every day on average at the UK High Court last year, according to a report prepared by law firm CMS along with Solomonic Litigation Intelligence.
The high numbers of lawsuits not seen since the aftermath of the 2008 global financial crisis have been sparked by increased instances of payment frauds, economic hardship faced by customers and disputes around Russian sanctions, according to litigators.
The sector was more likely to be entangled in fresh litigation than any other last year and “banks will need to be alive to the need to manage historic risks alongside new ones,” Vanessa Whitman, a lawyer at CMS, said.
So far this year London courts have played host to several eye-catching disputes. Billionaire Mike Ashley sued Morgan Stanley over a $1 billion margin call, in a suit that was ultimately dropped.
Elsewhere, HSBC Holding Plc scored a win in its successful fightback against Walt Disney’s £1.3 billion ($1.7 billion) suit over a film finance scandal, and Standard Chartered Plc fights a £1.5 billion claim over Iran sanctions breaches.
Banks continue to be increasingly sued by employees over race and sex discrimination in London tribunals as judges run the rule over potentially toxic working culture.
UK lenders are also staring at the imminent deluge of claims over multi billion pound misselling saga over car loans.
With over 200 new claims in the first quarter of 2024, the trend is seen to continue as disputes coming out from the past years of sluggish growth, high interest rates and the worst cost-of-living crisis in decades will keep making their way into courts.
Difficult economic conditions result in disputes such as those around defaults, loan guarantees and margin calls, said Christopher Charlton, a lawyer at Macfarlanes. “These trends look set to continue – as do claims relating to, or at least complicated by, expanding sanctions regimes.”
Fraud related cases are also expected to keep stacking up. Nearly £1.2 billion was stolen through fraudulent transactions in 2023, according to trade association UK Finance.
Separately, lawyers see a risk of litigation to banks around the country’s new and far-reaching anti-greenwashing rules, that came into force from May 31, the CMS report said. Litigation funders are looking for opportunities to take on ESG litigation against deep-pocketed lenders.
As was seen during the global financial crisis, claims tend to tick up when economies are sluggish. Market shifts and expectations around long term interest rates trigger disputes where parties entered into contracts on the assumption that a particular economic condition would stay constant.
“Downturns tend to expose wrongdoing as the tide goes out,” Rupert Lewis, head of banking litigation at Herbert Smith Freehills, said.
OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.
However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.
The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.
Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.
The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.
The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.
This report by The Canadian Press was first published Oct. 17, 2024.
OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.
In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.
The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.
Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.
In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.
It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.
This report by The Canadian Press was first published Oct 16, 2024.
OTTAWA – Statistics Canada says manufacturing sales in August fell to their lowest level since January 2022 as sales in the primary metal and petroleum and coal product subsectors fell.
The agency says manufacturing sales fell 1.3 per cent to $69.4 billion in August, after rising 1.1 per cent in July.
The drop came as sales in the primary metal subsector dropped 6.4 per cent to $5.3 billion in August, on lower prices and lower volumes.
Sales in the petroleum and coal product subsector fell 3.7 per cent to $7.8 billion in August on lower prices.
Meanwhile, sales of aerospace products and parts rose 7.3 per cent to $2.7 billion in August and wood product sales increased 3.8 per cent to $3.1 billion.
Overall manufacturing sales in constant dollars fell 0.8 per cent in August.
This report by The Canadian Press was first published Oct. 16, 2024.
