Banks called to adopt the 'model litigant values' used in Australia
The All-Party Parliamentary Group (APPG), in its disagreements regarding Fair Business Banking with the consumers, urges banks to follow "model litigant principles." The APPG said that the implementation of "fair, honest and mandatory" standards that impose good faith would be a "first step in driving change".
In a recent letter, the APPG proposed to the FCA that, in relation to a recommendation to impose "strict and substantial financial penalties (payable to the customers) where the bank has deliberately delayed, obfuscated and caused further detriment when it knows it is in the wrong" The APPG argues that for more than ten years, banks have "everything in their (quite extensive) power to deflect, deny and delay dispute resolution" and points out that although setting up the Business Banking Resolution Service was a step in the right direction, a wholesale (executable) provision for banks to behave in all their disputes with explicit guidance will be a "seismic shift".
The idea of 'model litigant values' originates in Australia. Originally targeted at disagreements concerning the government, following the Royal Commission on Corruption in the Banking, Superannuation and Financial Services Industries, the major Australian banks adopted the standards.
The basic concepts of the laws are as follows:
to behave frankly, consistently and reasonably in the management of lawsuits and litigation;
dealing with allegations in a timely manner;
giving an early assessment of the potential for success of the litigants;
the payment of legal claims without litigation;
Not to take advantage of a complainant who needs resources;
not relying exclusively on technological protection against a claim;
Consider alternate dispute resolution (ADR) solutions.
In proposing that a similar strategy be followed in the United Kingdom, the APPG speaks highly of the effect the standards have had on the banking industry in Australia, stating that they have transformed the way banks in Australia view their customer transactions "forever".
The truth, however, could well be less striking provided that, broadly speaking, the standards tend to be compatible with the stance that banks may now take in dealing with consumers, not least because of their regulatory responsibilities to pay due attention to the interests of their customers and to handle them equally. Time will say if the Australian precedent is being practiced in the UK and, as that develops, the realistic effect of implementing "model litigant principles."