Whatever the outcome of the latest case, lenders will face more bills
stopped long ago. Between 2007 and 2013, in online chatrooms called “Three Way Banana Split”, “Essex Express ’n the Jimmy” and other rib-ticklers, currency traders yapped about all sorts of things—including market tactics. The banter has cost their employers dear. Banks have been fined over $10bn for market-rigging by American and European regulators, including €1.1bn by the European Commission in May. An American class action cost 15 banks $2.3bn. But a lawyer’s work is never done.
Cases like this are still a novelty in Britain, despite a theoretically helpful change in competition law in 2015. Collective claims may now be brought to theon an “opt-out” basis, in which members of a specified class are included in the claim unless they choose not to be. If a monopolist rips off its customers, it may do lot of harm in total, but the damage to each may be small. Given the cost of going to court, many may not bother suing.
Therium Capital Management, established in 2009, is backing the foreign-exchange case. British-domiciled companies, pension funds and other investors are included automatically, unless they opt out . Cases are led by a representative who may or may not belong to the class. The forex suit is fronted by Michael O’Higgins, a former head of Britain’s Pensions Regulator. Mr O’Higgins estimates the damages to be at least £1bn .. One, against a maker of mobility scooters, was withdrawn in 2017.
By far the biggest case is heading to Britain’s highest court. The representative, Walter Merricks, an ex-head of the Financial Ombudsman Service, a dispute-settlement body, claims that between 1992 and 2008 some “interchange” fees set by Mastercard, though paid by merchants accepting its cards, harmed consumers because they were passed on in higher prices. Mr Merricks puts the damage at a whopping £14bn.
The busy Supreme Court will not hear the case before February and possibly not for a year. Because it concerns the criteria for theeven to consider damages, its verdict will be eagerly awaited by lawyers, litigation financiers and consumer watchdogs. Whatever the outcome of the foreign-exchange case, banks will face more bills.
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