Lloyds Bank Plc, Re

On a first directions hearing for a ring-fencing transfer scheme, the court must assess whether the proposed communications plan is appropriate to notify interested persons of the scheme and its likely effects. A satisfactory plan may combine targeted direct communications with public and media notification. Particular care is required for persons who may be adversely affected, including clear explanation of their statutory right to object and to participate in the court process. Previously given provisional directions may be confirmed where the scheme and relevant circumstances remain materially unchanged and the skilled person’s report supports the proposed approach.

The transferors, Lloyds Bank plc and Bank of Scotland plc, and the transferee, Lloyds Bank Corporate Markets plc, applied under Part VII of the Financial Services and Markets Act 2000 for directions concerning a proposed ring-fencing transfer scheme. The application concerned principally the notification of customers and other interested persons.

Indicative directions had previously been given in May 2017 by the Chancellor and Snowden J. Further provisional directions were given by Mr Justice Hildyard on 25 September 2017. At this hearing, following the regulators’ consent and receipt of the skilled person’s report, the court considered whether to confirm those directions, approve communications for Category 1 customers who were to transfer, and approve guidance concerning representations and objections.

1. The communications plan was approved. The court confirmed the earlier directions for Categories 2 and 3, subject to a minor amendment under the slip rule. The skilled person’s report had not undermined the previous approach and provided important confirmation of its adequacy.
2. The proposed arrangements for Category 1 customers were appropriate and satisfactory. The court did not need to examine every operational detail of the plan, provided that the schedule and accompanying material sufficiently explained the method and timing of individual notifications and the parallel public communications.
3. A comprehensive notification plan should use both appropriately targeted direct communication and broader public or media notification. The latter was almost as important as direct communication because awareness of the scheme might arise through general financial and public communications.
4. The statutory right of reasonable and properly made objection was an important part of the process. Although the covering letter explained the right elsewhere, the court considered that an express reference in the first-page “Johnson Box” would provide a benefit, if it could be added without undue expense.
5. The proposed guidance for representations and attendance at court was approved, with minor changes to reflect the constitution of the court and the different applicants. The court placed weight on maintaining appropriate uniformity between the directions given for the various bank schemes and found the guidance clear, concise and sensible.
6. The directions and guidance were approved subject to settling the terms of the order. The main substantive hearing was listed for 27 March 2018, with a case management conference in early March.