Bank Liability – APP Fraud – Clarity on Quincecare Duty

Authorised Push Payment Fraud

In the recent Court of Appeal judgment of Philipp v Barclays Bank UK PLC [2022] EWCA Civ 318, the court has provided further clarity on the question of whether a bank owes its customer a duty of care in respect of fraudulent transactions.

The judgment dated 14 March 2022 has upheld the appeal and opens the possibility of establishing a duty of care arising in the case of a customer instructing their bank to make payment when that customer is the victim of APP Fraud.

Ellis Jones have seen a significant increase in online fraud and has had significant success (to view our previous news article please click here) and recovery of funds for individuals, which will continue with the supporting comments in Philipp v Barclays Bank.

Background

Mrs Philipp became the victim of an APP fraud in March 2018 where her and her husband Dr Philipp were deceived by a fraudster known as JW to transfer their savings to a fraudulent account outside of the UK.

JW had managed to convince the couple that they were cooperating with the Financial Conduct Authority and the National Crime Agency to bring fraudsters to justice and that it would be safer to move their money into safer accounts in order to protect it from fraud.

By the time the fraud was discovered the money had gone.

Court of Appeal Consideration

Proceedings issued by Mrs Philipp were subject to a successful summary judgment decision in favour of Barclays Bank where the Quincecare duty was considered. The Quincecare duty requires a bank to exercise reasonable care and skill in carrying out a customer’s payment instructions when a bank has been “put on enquiry” or has reasonable grounds to suspect the misappropriation of funds from an account.

Barclays not only argued that it did not owe a customer a duty of care in relation to APP Scams, but also that to recognise such a duty would impose onerous and unworkable obligations on Banks.

Conclusion

Lord Justice Birss delivered the judgment for the Court of Appeal, which he held that the Quincecare duty, does not depend on the fact that the bank is instructed by an agent of the customer of the bank and accordingly upheld the appeal and took support from recognising that in a fight to combat fraud, Banks should, with the relevant reasonable grounds, not sit back and do nothing.

LJ Birss continued with confirming the possibility, in principle, that a relevant duty of care could still arise in the case of a customer instructing their bank to make a payment when that customer is the victim of APP fraud. The usual arguments of causation would need to be examined and established at a full hearing in due course.

This is a welcome judgment for claimants not only in claims against banks, but it may also have implications on others that hold client funds including solicitors, trustees, accountants, IFAs etc.

How can Ellis Jones help?

Customers that have fallen victim to scams and fraud should consider carefully the options available for recovery of funds and the factual background as to whether a duty of care is applicable. Early advice and legal assistance is important should the matter reach the court.

Our specialist Banking and Finance Litigation team can advise and assist you in gathering evidence and submitting an initial complaint if you believe you have been the victim of a scam or fraud.

Please do not hesitate to contact our Banking and Finance Litigation team by calling 01202 525333 or by email at banking@ellisjones.co.uk.