The time to seek legal advice when you think something may be wrong is when you first have a concern, not later on when you know there is a problem. One reason for this is that there are legal limitation periods for bringing claims, and in claims involving economic loss, they are tight. Another is that by commencing a mediation process early, lengthy and expensive litigation may be avoided.
Failure to act promptly has led to a substantial claim, in which a company asserted that a bank gave negligent advice relating to the now notorious interest-rate swaps, being struck out by the High Court because it was 'out of time', the claimants having not filed their claim quickly enough.
The law stipulates that for most claims you must commence legal proceedings within six years of the event causing the loss or, where the loss was not immediately apparent at the time, within three years from the point at which you could reasonably have discovered that there was an act or omission that caused you loss or damage.
Where the claim relates to negligent advice, success also depends on being able to prove that you have acted (or failed to act) as a result of it and would not otherwise have acted in the same way.
The case was brought after a company took out loans exceeding £3 million from a bank which were put under a 'cap and collar' arrangement with regard to interest rate movements. When some years later the company got into financial difficulties, it discovered that more than £500,000 would be charged to remove the cap and collar arrangement.
The company argued that it only became aware that there might be a possible mis-selling claim against the bank when the problems with interest-rate swaps were highlighted by the Financial Conduct Authority in 2012, although they had been aware of the enormity of the break charges in 2011. The Court found that on the evidence, the company had had the requisite knowledge in July 2011.
As this was more than three years before the company took action, the claim was statute barred.