Court strikes out claim of CRM and Principle breach by retrieving bank

In the case of Dawn Barclay-Ross v Starling Bank Limited, the claimant claimed that, as a victim of APP fraud,  she paid £120,000 from her Starling bank accounts. She sought to recover the amount she had paid, and other damages, from Starling.  Starling applied to have her claims struck out.

The claimant had made a series of payments from her Starling accounts to “Thor” in respect of standby letters of credit, and subsequently chased Starling to make further payments, informing the bank that Thor was not a new contact of hers. Later on the last day on which she chased Starling to make payment, she then asked it to stop payments as she had just “found out it is fake”. Starling said it had asked the recipient bank to return the funds. Some weeks later In July 2024), the claimant made another account to a different payee, which she said was also made as a result of fraud. In late October, the claimant sent Starling further information about the fraud and asked it to refund all the payments. Starling set up an internal APP fraud case and recalled the payments, some through an intermediary payment services provider. The provider reported that it had been unable to reclaim one of the payments. In early December, the IPSP told Starling some funds were available to be returned, and a week later Starling completed an indemnity in order for the funds to be returned – but at the date of the hearing the recipient bank (the Community Federal Savings Bank) had not responded at all to any requests, so the funds remained unreturned.

The claimant alleged:

• a breach of the CRM Code;
• a breach of Principle 6; and
• that Starling had negligently handled the attempts to recover her payments.

However, Starling said:

• the CRM Code did not apply to international payments, and, even if the payment was within scope, the CRM Code is not actionable by individuals;
• similarly a breach of FCA Principle is not actionable by an individual; and
• in relation to the negligence claim, Starling said the Particulars of Claim were so defective that it the facts were “inadequately and opaquely particularised” and no contractual or tortious duties were pleaded. So it did not know what case it actually had to meet meaning this element of the claim is also strikeable.

Additionally, the claimant sought to recover moneys paid from accounts in the name of a company, without making clear that she had standing to bring the claim, or joining it to the case as a claimant.

Starling accepted that, if the pleading had been satisfactory, it would be possible to advance a claim that it breached its contractual and/or co-terminous tortious duties by failing to seek instructions to recover the money.

The judge, while saying he did not have enough information on the CRM Code to know whether it was right that an individual could not bring a claim, but agreed that in any event the Code did not apply to the payments. He also agreed that breach of Principle 6 is not actionable by a private person, so agreed that the first two elements of claim should be struck out.

In relation to the rest of the claim, the judge struck out the part that claimed for distress, inconvenience and emotional harm, saying that a contract for banking services is “one to provide banking services. It is not one to provide relaxation, peace of mind or enjoyment”. However, he allowed the claimant a final opportunity to plead her case properly and address the points of quantum and, if allowed join the company to the proceedings.