Class actions against RBS?
The Scotsman for 26 January 2009 ran stories here and here, saying that Richard Keen QC, Dean of the Faculty of Advocates, was lobbying government to remove restrictions on class actions in Scots law to allow claims to be brought against Royal Bank of Scotland by those of its shareholders who have suffered major losses following last year’s RBS rights issue.
Scots Law News reported previously here the small claims action raised by Ian Hamilton QC against RBS for alleged fraud and negligence in the rights issue. In small claims actions the liability of the pursuer for expenses is restricted to £200, but one of Mr Hamilton’s concerns is that if the sheriff at Oban decides the case is too complex to be suitable for small claims procedure, it will then be remitted elsewhere, at which point the liability for expenses becomes unlimited. Similar concerns are likely to daunt other small investors who might otherwise take action as well. But in a class action the liability is spread around those who join it as pursuers, and the risk is considerably lessened.
Scots Law News recalls consultations on class actions in Scots law back in the 1980s, but these never went anywhere. Class actions are of course common in other jurisdictions, especially the USA; and it seems to be thought that such actions are already in contemplation in the US, not just against RBS but against some of the other financial institutions who handled their customers’ money so successfully in the last couple of years.