A) Am I able to make a consequential loss claim?
In order to make a claim for Consequential Loss, your complaint will first need to have been upheld, at least in part and you must have accepted the outcome.
B) How long do I have to submit my consequential loss claim?
A claim for Consequential Loss must be made within three months of the date of your acceptance of the bank’s [Offer/decision], either:
(1) as set out in the Complaint outcome letter (if you do not intend to appeal to the ITP); OR
(2) as set out in the final outcome letter following an appeal to the ITP (if you do intend to appeal to the ITP).
C) Originally I indicated I did not want to submit a CL claim, but now I do. Can I do so?
Yes provided you are eligible to make a claim. Please see FAQ A above to check you are in scope and FAQ B to check you are within time.
D) How long will it take for you to review my claim?
We are committed to completing the review of consequential loss claims as quickly as possible. The length of time taken will vary greatly depending on the nature and complexity of the claim. In some cases it will be necessary to get additional valuations which will obviously mean the assessment will take longer.
We will keep you informed throughout to ensure you are aware of the progress of your claim.
E) How much will you pay towards the cost of an initial meeting with an advisor?
In order to assist customers who feel they have suffered a Consequential Loss, the bank will meet the reasonable cost of an initial meeting with a professional advisor e.g. loss assessor (“initial advice costs”) to assist you in establishing whether you may have suffered a Consequential Loss, and if so, whether it is the type that could be adequately evidenced, and considered by the bank. In making this offer, the bank’s purpose is to seek to ensure that all customers have the opportunity to obtain preliminarily professional advice to best inform their decision as to whether to make a claim.
The bank is willing to reimburse initial advice costs irrespective of whether or not you submit a Consequential Loss claim.
We consider that a reasonable cost would normally be no more than £2,000 + VAT. We believe £2,000 should be sufficient to cover:
- A review of the bank’s outcome letter in respect of any complaints that have been upheld
- A meeting/discussion with the customer, potentially of a few hours to help them understand whether they might have grounds for a Consequential Loss claim and the conditions that they would have to meet in terms of evidence for that claim to be likely to be successful
- The preparation of a letter to the customer summarising the advice
This offer does not extend to the cost of preparing and pursuing a Consequential Loss claim, merely to the initial advice costs. Some or all of those other costs may be recoverable if (and to the extent that) the Consequential Loss claim succeeds.
F) Will you pre-approve my advisors costs for the initial meeting?
Yes, the bank will pre-approve reasonable costs in relation to an initial meeting. If you wish to do this, please forward appropriate details to GRGCustomerHelpdesk@rbs.co.uk.
To receive such a reimbursement you will be asked to provide evidence of the costs and confirm the purpose of the meeting (for example, an itemised invoice). The advice which you receive at any such initial meeting will be confidential to you. The bank will not be concerned (or entitled) to know its contents.
G) What if I incur professional costs as a result of making a successful Complaint or Consequential Loss claim?
You may have incurred costs with a professional advisor in bringing your Complaint. If this is the case then, as part of any Consequential Loss claim you may make, the bank will consider a claim for professional costs where those costs are reasonable and were incurred in making a successful Complaint. In addition, the bank will consider a claim for reasonable professional costs incurred in bringing a successful Consequential Loss claim.
You will be required to provide a detailed time breakdown of the services provided and the fees associated with those services, as well as evidence of payment.
In order to determine the amount to be offered, the bank will assess the reasonableness of the amount claimed on a case by case basis, but will base its decision on an assessment of the following criteria:
- Your particular circumstances – the extent to which these would justify the need for professional advice to assist with preparing the Complaint or Consequential Loss claim,
- The complexity of the Complaint – recognising that claims for some types of Complaints (e.g. PPFAs) are inherently more complex to raise than for others (e.g. fees or interest), and
- The success of the Complaint – as noted above, fees will only be considered in relation to successful Complaints
For the avoidance of doubt, fees that are dependent on the success of the Complaint or Consequential Loss claim, and based on a percentage of the amount offered by the bank, will not be considered.
Where the Complaint Outcome is appealable, the bank’s decision on any amount of professional fees will also be appealable to the ITP.
H) What sort of evidence should I provide in support of my consequential loss claim?
What is capable of being claimed as a Consequential Loss, along with the level of evidence required to meet the applicable legal tests, will depend on the facts of each case. You must provide sufficient evidence to demonstrate that it is more likely than not that the Consequential Loss you are claiming was caused by the unfair actions of the bank and/or the Direct Loss incurred. Therefore your claim should explain in as much detail as possible:
- The particular loss you are claiming
- The amount of loss you are claiming, and
- How this loss was caused by the Direct Loss and/or unfair actions of the bank.
We are only able to consider claims for Consequential Loss which are supported by evidence. Please provide us with any documents and information which you think are relevant to your Consequential Loss claim, such as evidence of the loss suffered and the circumstances which gave rise to it. We will consider all evidence provided to us.
As a general principle, greater weight will be attached to evidence that was created at the time of the claimed loss, known as contemporaneous evidence. Greater weight is also likely to be given to factual evidence that is undisputed and/or verifiable. An example of contemporaneous and verifiable evidence would be bank statements from the time showing the amount of additional borrowing and the cost of that borrowing.
While the burden is on customers to provide sufficient evidence to demonstrate their claim, we will also consider any relevant evidence we have on our files when assessing your claim. However, to ensure that we do not miss anything, please provide us with any evidence that you think may be relevant, and as much information as possible to allow us to assess what additional evidence we may hold that would be relevant to your claim.
Examples of the types of evidence we would expect to receive will depend on the nature of the claim but some non-exhaustive examples include:
- Bank statements
- Board minutes
- Statutory financial statements, management accounts or other financial records
- Correspondence with third parties relating to failed attempts to raise funds from other sources
- Correspondence relating to any business opportunity you would have pursued
- Projections of the additional income or profit you would have made by pursuing that business opportunity, including supporting evidence or business plans
- Copies of invoices for costs together with evidence of payment
- Copies of loan agreements together with the relevant interest rates
- Copies of contracts or written offers
I) How should I evidence Wasted Management Time both in terms of the loss incurred?
In simple terms, a successful claim for wasted management time requires you to establish that:
a) The underlying actions of the bank for which a complaint has been upheld resulted in a diversion of staff time within your business; and
b) That diversion caused a significant disruption to the business.
Once you have established this, then you should set out:
c) The quantification of any loss resulting from the business disruption. In some cases, it may be possible to directly quantify a loss of revenue attributable to the diversion of staff time (although normally these are considered to be loss of profits claims). However, where this is not possible, it is reasonable to infer that, but for the significant disruption, staff would have applied their time to activities which would have generated revenue (either directly or indirectly) for the business in an amount at least equal to the costs of employing them. As a result, we will accept quantification of the loss as the cost of employing staff (i.e. by reference to their salary/wages) to be used as a proxy to quantify financial loss to the business as a result of the disruption.
J) May I submit further evidence?
You will have one opportunity on receipt of your outcome letter to correct factual inaccuracies or provide material additional information, which was not recognised as material or not available at the time the claim was submitted.
K) How does the 8% interest paid on my Direct Loss impact my consequential loss claim?
RBS adds 8% Simple Interest to any Direct Loss amount offered as part of a Complaint outcome. This interest payment is intended to cover any Consequential Loss that may have been incurred, or opportunity that may have been lost, as a result of the unfair actions of RBS and/or the Direct Loss. In some cases Customers may feel that this adequately compensates them for their Consequential Loss.
When a claim for Consequential Loss is upheld, in quantifying any compensation offer, the bank will take into account the 8% interest already paid which means it may be off set to avoid double recovery.
L) Will I be entitled to 8% simple interest on my Consequential Loss claim?
We add 8% simple interest to any amount of Direct Loss awarded for an upheld complaint. The 8% is applied whether the Direct Loss is a fee, interest payment or any other kind of charge, since all represent a position where you are deprived of the use of the money for a period of time.
The 8% simple interest is not an admission that you have suffered a further loss, but is a proxy for the ‘opportunity cost’ to you for being deprived of the amount of the Direct Loss for a period of time and therefore to negate the need for you to bring a Consequential Loss claim, unless you believe your loss is greater than 8%.
However the same principle does not apply to awards for Consequential Loss. This is because Consequential Loss is a replacement of the proxy ‘opportunity cost’ by the actual amount of loss as evidenced by you. You cannot claim for Consequential Loss and also claim that you should receive a further 8% simple interest on top of that loss for an unspecified further loss or opportunity.
The only exception to this principle is that we will add 8% simple interest to the element of your offer of redress for Consequential Loss that is for evidenced out-of-pocket costs because we would have added these to your offer of Direct Loss had we been aware of them.
In the case of a payment awarded on a discretionary basis (such as a discretionary payment), as the award is not for a monetary loss, interest is not applicable.
M) Can I claim for Interest on Consequential Losses?
Yes. Should you believe that one Consequential Loss led to a further Consequential Loss (for example through the reinvestment of profits from one opportunity into another opportunity), you may claim for that additional loss. However you will be expected to evidence both losses as part of your Consequential Loss claim. Additionally, you can claim for an actual interest cost which has been incurred or loss of interest provided this can be evidenced.
N) I am a director/guarantor, can I claim for losses that I have suffered personally?
If you made a complaint as a Guarantor and that complaint was upheld, then you may also bring a claim for first party losses suffered in your capacity as Guarantor.
Otherwise the bank will only consider claims in relation to losses incurred by customers. Therefore, individuals connected to a customer, such as directors and/or shareholders are unable to make claims for Consequential Loss arising out of an upheld customer complaint, and so losses suffered by third parties will not be recoverable.
However, a guarantor does not always have to have an accepted upheld guarantor complaint in order to make a CL claim.
Where a guarantor has had a personal guarantee liability called upon by the bank and there are upheld complaints in relation to the company, it is reasonable for a guarantor to raise a claim as part of the company claim that the unfair actions of the bank/GRG upheld in the company caused them to suffer a loss under their personal guarantee.
The guarantor may not have necessarily made a complaint or received an upheld guarantor complaint outcome and therefore, the upheld company complaints would be the only route available for them to make a consequential loss claim.
We will assess the claim where we consider that the unfair actions of the bank/GRG upheld in the company may have caused a loss to the guarantor under their personal liability. Any offer of payment will be made to the guarantor.
O) Can I claim for any additional tax liability that I may incur as a result of the Direct Loss or Consequential Loss payment?
Depending on your circumstances and any offer made by the bank, the receipt of a Direct Loss or Consequential Loss payment may generate a tax liability. If you are able to prove that you are in a worse tax position as a result of receiving a payment, relative to the tax that would have been incurred at the time, then a claim for the tax loss will be considered. This will be determined on a case-by-case basis.
You can either make a claim for tax loss once you are aware of your final tax position, alternatively the bank will consider a claim based on an estimated future tax position.
P) What are my options if I disagree with the bank’s response to my claim?
After you receive your Consequential Loss outcome letter the bank will accept one further submission in order to correct factual inaccuracies or provide material additional information, which was not recognised as material or not available at the time the claim was submitted.
Should you wish to challenge the outcome you may only do so through the Independent Third Party (‘ITP’) appeal process.
Subject to meeting the Financial Ombudsman Service (‘FOS ’) eligibility criteria, you may also have the right to refer your consequential loss outcome to the FOS free of charge. However, you must do this within six months of our final response to your consequential loss claim.
Q) What is the role of the Independent Third Party in consequential loss claims?
The ITP has agreed to hear appeals against Consequential Loss outcomes in relation to Eligible Complaints.
R) Can I make more than one consequential loss claim?
Only one Consequential Loss claim will be accepted for each Customer i.e. all interested parties must agree on the claim and it must cover all areas of Consequential Loss that the Customer wishes to claim.
S) I received a refund of a complex fee (under AFR), can I submit a Consequential Loss claim?
Any refund made under the AFR process was made on a voluntary basis by the bank, which means that the bank has not accepted any fault in applying the charges and, as such, a consequential loss claim cannot be brought.
T) Will you take into consideration the cumulative effect of other remediation outcomes (such as the IRHP review)?
Where we are assessing a claim for consequential loss for a customer who also received redress under the IRHP review it may be appropriate to assess the claim based on the cumulative effect of both IRHP redress and the unfair actions of GRG. It is not necessary for you to claim that losses resulted from both.
In considering whether it is appropriate to include IRHP redress we will bear in mind the following:
• The loss should have been primarily caused by the unfair actions of GRG. If not then the claim should have been made in the IRHP review.
• In determining whether the loss was primarily due to the unfair actions of GRG consideration should be given to the relative cashflow impact i.e. if the amount of direct loss as a result of the unfair actions of GRG is immaterial it will be difficult to conclude the loss was primarily caused by GRG.
• Claims that were made in the IRHP review and were unsuccessful can be raised again and the assessment should be whether the combined impact of the two unfair actions caused the loss.
• We will review the IRHP CL outcome to ensure that the redress has not already been utilised to support an upheld claim.
• Similarly the timing of the cashflow impact should be considered i.e. if there is a significant time gap between the IRHP impact and, for example, unfair fees charged by GRG then it might be difficult to argue they worked together to cause the loss.
• In reviewing an IRHP CL Claim, and particularly where the redress periods are concurrent, it is appropriate to bear in mind what was claimed at the time i.e. whether or not the same counterfactual is being claimed now.
• For the avoidance of doubt the current GRG CL process cannot be used as a sweeping up exercise for claims that should have been made under the IRHP review and, for whatever reason, were not.
• The same considerations apply to other remediation projects.