Quincecare duty: key UK Supreme Court bank transfer fraud decision

In an important development relating to the Quincecare duty of care owed by banks to their customers, the Supreme Court handed down its Judgment in Philipp v Barclays Bank UK PLC [2023] UKSC 25 on 12 July 2023. The case concerned an ‘Authorised Push Payment’ (APP) fraud where the victim is induced by fraudulent means to authorise their bank to send monies to a bank account controlled by a fraudster.

Lord Leggatt handed down a unanimous judgment and wrote:

“It is a basic duty of a bank under its contract with a customer who has a current account in credit to make payments from the account in compliance with the customer’s instructions. This duty is strict. Where the customer has authorised and instructed the bank to make a payment, the bank must carry out the instruction promptly. It is not for the bank to concern itself with the wisdom or risks of its customer’s payment decisions.”

Commercial Litigation Partner, Duran Ross spoke to Ben Rigby at the Global Legal Post and shared his view:

“Whilst this decision ends the recent expansion of the Quincecare duty to include cases where the customer itself authorised the payment, all is not lost for victims of fraud as the Quincecare duty as set out in the eponymous case and summarised in the 2019 Supreme Court decision in Singularis Holdings v Daiwa Capital Markets remains intact. It continues to be the case that there is an implied term in the contract between a bank and its customer that the bank will use reasonable skill and care when executing the customer’s instructions. Even though the Supreme Court in Philipp found that the duty cannot arise where an instruction is clear and given by the customer personally, or by an agent acting with apparent authority, the application of the duty is highly fact specific. Claimants will no doubt continue to argue that it applies in various instances.”

He also added:

“It is also worth noting that victims of APP frauds can pursue other avenues. For example, the Contingent Reimbursement Model Code sets out consumer protection standards to reduce APP frauds. Signatory firms commit to reimbursing customers who are not to blame for the success of the fraud - for example, customers that took reasonable steps to verify what they were being told by the fraudsters. Whilst the code is voluntary, signatory firms - which include most of the major UK banks - can be expected to comply with it. In addition, as in Philipp, there remains the possibility of pursuing claims against banks for failing to take prompt steps to seek to recover monies lost because of fraud. Finally, there is the possibility of pursuing civil fraud claims against fraudsters themselves although prospects will depend on various factors including, for example, the extent to which it is possible to identify the fraudsters.”

The Supreme Court judgment
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