The Supreme Court determines the Quincecare duty’s capacity
The law around the Quincecare duty continues to evolve rapidly as the courts strike a balance between the competing interests in play. In the latest development, the Supreme Court has given its unanimous judgment in the case of Philipp v Barclays Bank UK Plc, on the issue of the scope and extent of the Quincecare duty owed by banks to their customers.
The duty arises from the eponymous Barclays Bank plc V Quincecare Limited  4 All ER 363, in which it was held that a bank owes a duty to exercise reasonable care and skill when executing a customer’s instructions, which includes not executing payment instructions if the bank is on enquiry that those instructions are an attempt to misappropriate funds.
In its long-awaited judgment, the Supreme Court has overturned the Court of Appeal’s judgment and determined that the Quincecare duty’s scope does not extend to cases where a customer is defrauded by a third party, as opposed to the more typical Quincecare scenario of a customer being defrauded by one of its customer’s agent.
Our previous Perspectives  on the evolution of the law around the Quincecare duty includes a description of the background to the case, and its appellate history.
The central question that the Supreme Court had to grapple with was whether a bank owes an individual, natural person, customer a duty not to carry out a payment instruction if the bank has reasonable grounds to believe that the customer is being defrauded.
In a judgment written by Lord Leggat, the Supreme Court confirmed the relationship between a bank and a customer being a contractual one and reiterated that 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. However, the Supreme Court determined that it is a mistake to suppose that “the bank’s duty of care is capable of conflicting with and potentially displacing its duty to execute a valid payment order from its customer”. 
Against that backdrop, the Supreme Court made the following remarks in its judgment:
• The Quincecare duty does not apply where the customer has authorised the transaction.  Banks do not owe a duty to customers duped into APP frauds, rather the primary obligation of a bank is to execute customer instructions in a timely manner.  The court determined that “provided the instruction is clear and is given by the customer personally or by an agent acting with apparent authority, no inquiries are needed to clarify or verify what the bank must do”. 
• The Quincecare duty “properly understood, it is simply an application of the general duty of care owed by a bank to interpret, ascertain and act in accordance with its customer’s instructions”. 
• The Quincecare duty applies in circumstances where a customer’s agent acts dishonestly to defraud the customer and giving instructions whilst lacking the actual authority to do so. Accordingly, the Quincecare duty does not go beyond the duty to exercise reasonable skill and care arising where the validity of content of the customers’ instruction is unclear, therefore requiring the bank to make inquiries to confirm whether the customer has authorised the transaction. 
The Supreme Court’s judgment reinforces that the relationship between a bank and a customer is a contractual one. There is an “implied term by law in the contract between a bank and its customer that the bank must carry out the services with reasonable care and skill”, which is the case for any contract for the supply of services in the course of a business.  The bank’s obligation to carry out payment instructions in accordance with its mandate from the customer does not lend itself to much flexibility, rather the contract requires the bank to follow payment instructions promptly, without second-guessing the customer’s motivation.
Lord Justice Leggatt focussed on questions of agency and authority and distinguished this case from the original Quincecare decision, which was based in circumstances in which an agent of the customer itself is defrauding the customer and the bank having reason to believe that is the case. The rationale behind the Quincecare decision remains correct. Accordingly, where a bank proceeds to execute instructions without first verifying their validity, in circumstances where it has “reasonable grounds for believing that a payment instruction given by an agent is an attempt to defraud the customer” and “the instruction proves to be given without the customer’s authority, the bank will be in breach of duty”. 
The Supreme Court made reference to the Financial Services and Markets Act 2023 which provides for a mandatory reimbursement scheme by way of section 72 which amends regulation 90 of the Payment Services Regulations to enable liability to be imposed “where the payment order is executed subsequent to fraud or dishonesty”.  Whilst it might be argued that this will give victims of APP fraud a legislative framework within which redress may be forthcoming, the fact that such scheme (i) cannot be called upon and enforced directly by bank customers who must rely on regulatory intervention; and (ii) is limited to the Faster Payments Scheme, means that its effectiveness as a tool in the fight against fraud may be limited.
The Supreme Court Judgement - Philipp (Respondent) v Barclays Bank UK PLC
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10 Quincecare duty of care not confined to companies and agents and Privy Council rejects extension of Quincecare duty of care