Scott NodderAs we reported in last week’s edition of FIN in Philipp v Barclays Bank UK PLC [2023] UK SC25, the Supreme Court allowed the Barclays appeal against the Court of Appeal decision that had, in essence, widened the scope of the Quincecare Duty. That decision resulted in the duty applying where fraud had arisen out of an authorised push payment instruction from the customer itself (APP fraud). The Supreme Court decision reverses that and confirms that a bank only owes a Quincecare duty of care to a customer where there are reasonable grounds to believe that an agent of the customer is attempting to misappropriate funds belonging to the customer. If a customer provides the bank with the instruction, as was the case with Mrs Philipp, then the Quincecare Duty will not apply. Instead, the bank will revert to its strict duty to carry out the customer’s instruction promptly.
This is a welcome decision for banks and may have been influenced by the developing regulatory background. Section 72 of the Financial Services and Markets Act 2023, which received Royal Assent on 23 June 2023, provides a mandatory reimbursement scheme for payments that are made under the “Faster Payment” system, where the majority of APP fraud cases arise. The scheme comes into effect in April 2024. This scheme builds on the existing consumer protection under the Contingent Reimbursement Model Code (CRM), a voluntary scheme that a large number of the main payment service providers are part of.
Whilst the Quincecare Duty is here to stay and will apply where a bank has suspicion that an agent is attempting to misappropriate funds, this decision provides clarity around the circumstances where the duty will not apply.
The legal proceedings in this case continue to allow Mrs Philipp’s alternative claim that Barclays owed her a duty to act promptly to recover the payments after the fraud has been discovered and had failed in that regard. That will be determined at trial.
