A Supreme Court ruling that handed a crushing defeat last week to Norway’s biggest bank, DNB, may set off a string of claims like the one finally won by dissatisfied DNB customer Ivar Petter Røeggen. He felt he’d been misled by the bank’s financial advisers, and the country’s highest court agreed.
Røeggen’s complaint dated back to 2000, when he borrowed NOK 500,000 from DNB to place in two investment products the bank was selling. He lost NOK 230,000 on the scheme but won support from Norway’s consumer council, which asked the finance minister to investigate the bank’s sale of such structured savings instruments.
The ministry eventually decided to make it more difficult for the banks to sell them, while a professor at business school NHH wrote a crushing evaluation of DNB’s scheme. Røeggen also prevailed in his complaint to a state banking board (Bankklagenemnda), which claimed DNB violated sound banking practices and ordered that Røeggen’s loss be covered.
DNB fought the board’s order and Røeggen’s complaints all the way to the Supreme Court but now has lost itself, and also must face claims from around 1,500 other customers like Røeggen who also felt cheated by DNB’s loan-financed savings instruments. Bank officials, who have spent millions fighting the case over the years, quickly said Røeggen would get his money back, but hadn’t decided how it would react to all the other plaintiffs lining up for similar compensation.
Their lawyers are hopeful. “I believe my clients’ cases (against DNB) are considerably stronger now,” said Jens I Kobro, attorney for 19 DNB customers who invested in the same products Røeggen did. Røeggen’s victory was also savoured by consumer finance magazine Dine Penger (Your Money), which had made consumers aware of how DNB’s savings products benefited first and foremost the bank. “This is a huge victory for Røeggen, and for years of Dine Penger’s journalism,” said the magazine’s editor Tom Staavi.