Investors in the UK seeking to sue big banks over FX rigging have just been presented with a new option to do so.
A report by Reuters points out that Britain’s new Consumer Rights Act paves the way for the first “opt-out” class actions for breaching UK or EU competition law from October 1, 2015. This means that UK-based members of a defined group will automatically be bound into legal action unless they opt out.
The new regime, overseen by the Competition Appeal Tribunal (CAT), aims to offer a more effective route to compensation for victims of anti-competitive conduct.
As a result of the new rules, Britain could see a series of U.S.-style class action claims against banks over FX rigging. Given that around 40% of the $5.3 trillion-per-day Forex market is traded in London, the interest in such cases may be quite high, with legal firms having already started the race. Critics even argue that opt-out regimes can fuel claims without merit.
But Reuters also mentions that the existing “opt-in” regime in Britain has led to only one minor case.
The first FX claims in Britain may take time. Reuters quotes Belinda Hollway, a London-based partner at U.S.-based law firm Scott and Scott, who says that “the simplest and quickest route to obtaining compensation at this stage is a conventional (opt-in, group) action in the High Court”.
She adds that a forex claim might not be launched in Britain until early 2016.
Regardless of the legal path claimants select, banks seem to be prepared – at least this is suggested by the hefty sums they have set aside for further fines, litigation and civil action lawsuits.
US, UK and Swiss authorities last year imposed multi-billion dollar fines on several major banks following large-scale probes into market manipulation.