Step 1: Suspend time-barring
First of all, time-barring of the claims must be suspended. To achieve this, it is sufficient to launch enforcement proceedings against the bank and/or the asset manager as per the Swiss Federal Act on Debt Enforcement and Bankruptcy (DEBA). For claims of less than CHF 100,000, the enforcement costs amount to about CHF 150. We therefore recommend enforcement for the maximum amount (including 5% interest for the duration of the client relationship). The bank receives a summons to pay, against which it can raise an objection (known in German as a “Rechtsvorschlag”). But even if the bank does so, time-barring of the claims is still suspended.
Step 2: Obtain documents
Since clients who submit voluntary declarations typically have few documents or none at all, they themselves (or an expert whom they engage) must obtain all the documents required to value the claims (e.g. the asset management agreement or asset statements for the last 10-15 years). These documents are normally held by the advisors who have drawn up the voluntary declaration. Since they only require income statements covering the last ten years for a subsequent declaration of interest income, only a few claimants are fully documented. To close these gaps in the documentation, the former bank client can request these documents from the bank. However, past experience has shown that the banks are unwilling to meet such requests; they point out that the client is not entitled to disclosure, which is not true. As mentioned above, they like to assert that the client cannot present an asset management agreement with the bank. In such cases, it is advisable for the client to engage an external service provider to safeguard his interests. If need be, however, these documents can also be demanded on the basis of article 8 of the Swiss Data Protection Act.
Step 3: Valuation of claims for reimbursement and compensatory damages
As soon as the asset statements and lists of transactions are available, specialised advisors can make an initial assessment of the reimbursement claims.
In parallel, the bank and/or the asset manager must be requested to disclose their distribution commissions or retrocessions for the last 10 years after the client relationship was terminated. These lists are then compared to internal estimates and plausibility-checked. If the bank or asset manager only supplies totals for each year, the details for individual products must be requested. Banks are particularly keen to forget kickbacks that originate from companies in their own group, or those which have been paid back to the bank via circuitous routes from funds that belong to the group.
Step 4: Pre-litigation claim enforcement
Since the banks’ reflex reaction to a summons to pay is to raise a legal objection, the only option for the claimant/injured party is to have his claims quantified in an arbitration procedure, and to demand surrender of the “distribution commissions”. The first step in the proceedings before the justice of the peace is to sound out the parties’ readiness to reach a settlement, and to conclude one if appropriate. Prospects of a settlement improve significantly if the claimant/injured party is comprehensively documented. We have already been able to use this route to conclude many settlements that made economic sense, taking account of the litigation risk. In some cases, banks are prepared to pay back up to two thirds of proven retrocessions. If discrepancies become apparent from a comparison of the investor’s profile with the investment strategy of the bank or asset manager, it is not advisable to conclude a netting agreement in settlement of all claims in the arbitration court.
Step 5: Enforce claims in court
If the arbitration hearing fails to achieve agreement between the parties, the justice of the peace issues authorisation for a lawsuit. For this purpose, the claimant/injured party has a three-month grace period to bring a legal action against the bank/asset manager. This route requires considerable staying power and a well-filled “war chest”. Alternatively, it is possible to engage a litigation funder who takes on the litigation risk after submitting a draft legal complaint. However, litigation funders require payment for this preliminary work in the form of a contingent fee of up to 35% of the amount realised or awarded.