This guidance note is in four parts:
- The Re-Review Panel must establish whether a Customer incurred D & C losses as a result of the IAR Fraud.
- There are four sections to our guidance notes about D & C losses as follows:
- Introduction to D & C losses - here we explain what we mean by ‘D & C losses’ and how it differs from other forms of victim compensation;
- Examples of types of D & C losses – here we provide examples of types of D & C losses that Customers might have incurred, giving separate examples of financial losses suffered by companies compared to losses suffered by individual Customers;
- Our Assessment Methodology – this section tries to describe the general process we will go through to assess whether D & C losses have arisen in your case, and if so how we will go about quantifying these. We hope that this will give you some understanding of our approach so you can mention relevant points to us when we are considering your case; and
- Potential sources of information to help assess D & C losses – in this section we list the sorts of information that would be useful where it is available (the more information we have the better, but we appreciate there will limitations on what exists).
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- D & C losses (an abbreviation for ‘direct and consequential’ losses) are financial losses suffered by Customers as a result of the IAR Fraud.
- For our purposes, there is no need to distinguish between ‘direct’ losses and ‘consequential’ losses as we can compensate for ALL financial losses resulting from the IAR Fraud where these are quantifiable. Whenever we use the term ‘direct and consequential’ losses or ‘D & C losses’, we are really just talking about financial losses of any kind.
- Examples of financial losses include –
- fees paid to QCS/its Associates for services that the Customer thought were for honest purposes, but which in fact were for fraudulent purposes;
- a loss suffered when the Customer sold an asset that they would not have sold if the fraudsters had not caused them to do so for their own fraudulent gain;
- income or profits that the Customer would have earned had the fraudsters not involved themselves in their business and fraudulently influenced its activities for their own benefit.
- D & C losses can only be compensated where we can establish that it was the IAR Fraud that caused a Customer’s financial losses (see our separate guidance note ‘IAR Fraud and Causation of Loss’ for an explanation of how we will consider this). We will therefore need to identify–
- how the IAR Fraud caused the Customer to suffer D & C losses;
- what would have happened financially to the Customer if the IAR Fraud had never happened; and
- the amount of the Customer’s D & C losses as a result.
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- You may have received compensation for ‘Distress and Inconvenience’ from the Bank in the Customer Review. This was intended to compensate all who had suffered distress and inconvenience, irrespective of whether a Customer had also suffered D & C losses as a result of the IAR Fraud. Sir Ross commented in The Cranston Review that the Bank extended compensation under this heading to Customers who had suffered as a result of “bad or aggressive banking practices”, as opposed to fraud. He said, “Fraud did not have to be evident in a case for D & I compensation to be awarded; the focus was on interactions with the convicted fraudsters and the reasonableness of what they did.”
- In contrast, the D & C losses assessment that we are undertaking is concerned solely with your or your Company’s D & C losses as a result of the IAR Fraud. Our remit does not include compensating for distress or inconvenience or for aggressive banking practices.
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