In a decision that gets straight to the heart of the relationship between banks and their customers, on 12th July the Supreme Court handed down its much-anticipated judgment in Philipp v Barclays Bank UK Plc [2023] UKSC 25.
In a landmark decision that challenges the legal principles behind Quincecare Duty, the Supreme Court found that the bank did not owe a duty to protect its customer by refusing to carryout payment instructions when there are reasonable grounds to believe said customer was the victim of Authorised Push Payment (APP) fraud.
Whilst the decision will certainly be welcomed by banks, what does this mean for the victims of fraud? Let’s explore.
A quick case summary
In 2018 Mr & Mrs Philipp were deceived by nefarious individuals posing as FCA and NCA officials into instructing the transfer of ÂŁ700,000 from Barclays to an account in the UAE. When it became apparent that the couple had been defrauded Barclays made an unsuccessful attempt to recover the funds. Mrs Philipp then brought a claim against the bank on the basis that it owed her a duty under what is known as Quincecare Duty (Barclays Bank Plc v Quincecare [1992] 4 All ER 363) – the responsibility of a financial institution to protect customers from circumstances where it has reasonable inquiry to believe that they may be at risk of fraud.
The impact
By ruling in favour of Barclays, the Supreme Court has confirmed that Quincecare Duty does not apply where a customer is a victim of APP fraud and has themselves given the bank instructions to transfer the funds.
The Court rejected the idea that Quincecare Duty is “some special or idiosyncratic rule of law”, but instead represents a general duty of care owed by a bank to interpret, ascertain, and act as per a customer’s instructions. The Court set out that Quincecare principles do not apply when “the validity of the instruction (is) not in doubt”. The bank had therefore acted in accordance with its duty by executing the instruction. Â
Much need clarification
The scope of Quincecare duties have been a hot topic over the last few years. This landmark decision goes a long way towards clarification…at least for now.
This decision will give banks some much needed comfort, at least in the short term, that they can continue to act with confidence that it’s their duty to follow customer payment instructions, without the need for costly and time-consuming investigations that place a commercially unrealistic burden on them.
Although, with APP fraud one of the fastest growing scams in the UK, and fraudsters using ever more sophisticated tactics to unwittingly trick members of the public into transferring funds, more clarification and refinement of the duty may still be required to protect customers for the long-term.
So not quite game over then.
It’s also not quite game over for Mr and Mrs Philipp either. The Supreme Court extended permission for an alternative claim against Barclays bank on the basis that it failed to act promptly to recall the funds once it was notified of the fraud.
Watch this space.
