What's Happening about Compensation for your Northern Rock sales confiscated by the Government - 10th July

Below is a letter recently sent (either via email or in the post) from Robin Ashby to all members of the NRSS group.

Dear Shareholder,

Recently I attended a meeting of the UK Shareholders Association, who have also campaigned on this issue. Although we post their regular mailing on our blog (http://nrssg.blogspot.com/) I thought I’d write and give you an update.
Before any offer of compensation is made the Government needs a valuation. It is trying to appoint a valuer, but is reported to be having difficulties because some of the big firms are declining to bid. The reason for this could be twofold; the nationalisation law sets such harsh conditions that the value comes out at zero and shareholders (the very big ones like SRM and RAB, plus a representative number of private individuals) are taking legal action.

Step 1 is what is called an application for a judicial review of the nationalisation law. The Government isn’t fighting the moves for such an application but even so the legal process is very slow.

At the moment, the plaintiffs (shareholders) are awaiting a further response from the Government to its claims. This is currently expected at the end of this month. The plaintiffs then have until around 27th October to respond.

As I mentioned, the Government has agreed not to oppose the application for judicial review. A Consent Order is now needed; this has not yet been issued by the Court.
The hearing before two judges (one from the Chancery Division, the other from the Administration Court) is not expected before 1st December at the earliest. The hearing is likely to last 3-4 days. It is expected that the judgement will be reserved, so will probably be issued in late January next year.

As the court may have something to say about the valuation process, the valuer – even if appointed soon – can’t get to work in earnest until then. There is of course the possibility of plaintiffs appealing to the Court of Appeal or even the Supreme Court (as the House of Lords will be known.)

In the meantime, a valuer may start to establish the procedures that will be adopted before reaching a valuation. This will certainly include the possibility that shareholders – including you – will be able to make representations to the valuer about the method and the value. The valuation process could easily take a year and could also be challenged in court.

In parallel with all of this in the UK, certain non-EU shareholders have lodged a complaint with the European Commission. This seems to rotate around Article 56 and whether the Bank of England acting as lender of last resort is a form of State Aid (which the EU generally doesn’t allow). Throughout the banking sector in Europe of course, governments act as lender of last resort to ensure stability of the system. This could go all the way to the European Court of Justice – again, not a quick procedure.

The current application for a Judicial Review hinges on human rights (on deprivation of property). An argument could also be made from action for damages against the government on the basis that their actions caused and/or exacerbated the original run on the bank and thus nationalisation.

What else can you do? Firstly, and especially if you have any questions, can I urge you to attend the next UKSA meeting in the North East. This will be held on July 17th at 6.30pm in the Banqueting Suite, Civic Centre, Newcastle.

UKSA officers including Chairman Roger Lawson and local campaigner Dennis Grainger(the ex-employee who you may have seen on BBC TV Question Time) will be there. Let me or Roger know if you can come - we are expecting around 100 so far. Incidentally, Dennis hopes that there will be a piece about the campaign on the Politics Show on BBC TV on a Sunday lunch time.

The second thing you can do is to write to the Trustees of any pension fund of which you are a member, urging them to back the campaign for fair treatment. We can provide you with a specimen letter to build upon.

Next, if you haven’t already done so – or even if you have - you can write to your MP asking for a system of fair compensation. As one of the legal advisers has said, there is a moral argument as well as a legal one and a climate of opinion can be seen as important by judges. And if you would like to help the cause even more, see Dennis Gilmour at the meeting and offer to help him – he has a small band of about 6 people backing him up and more volunteers would be very welcome.

In conclusion, just to remind you why this is important. Even if you had the minimum number of shares when Northern Rock demutualised, these were worth over £6000 at their peak early last year. The Government believes you should receive nothing for them. But the Equitable Life campaign, which has been going on four years, shows what can be achieved with persistence when right is on your side. This week, after many trials and tribulations, it is reported that the Ombudsman will say that the Government should compensate those who suffered loss. I was one of them but I still expect it will take more time and trouble before I finally get justice. I hope that like me you will take a long view and do what you can to help the campaign.

With best wishes,

Robin Ashby