In a significant ruling, the highest court in Britain has decided that the bank, Barclays, cannot be held liable for funds lost in a scam by its customer, Mrs Philipp. However, the court has allowed Mrs Philipp to proceed with an alternative case against Barclays, claiming that the bank failed to take adequate steps to recover the lost funds.
Previously, victims of scams relied on a 1992 case known as Quincecare, which established that banks should not execute payments requested by a customer if they suspect fraud and should conduct necessary investigations. However, this rule traditionally applied only to payments made by company agents, not account holders themselves.
Mrs Philipp argued that Barclays should have upheld the Quincecare duty for the fraudulent payments she approved, but her claim was unsuccessful.
Simon Fawell, a partner at commercial law firm Signature Litigation, commented on Barclays’ victory, stating that it marks the end of a line of cases that were expanding the scope of the Quincecare principle. He also pointed out that victims of fraud face difficulties in pursuing claims against the fraudster’s bank under English law.
However, the court did allow one aspect of Mrs Philipp’s claim to proceed, which alleges that Barclays should have acted more promptly in recovering the lost funds. This aspect will be further investigated and determined at trial.
Fawell noted that there are ongoing claims in the courts aiming to challenge the boundaries of when victims can recover from the fraudster’s bank. He emphasized that this remains a gap for fraud victims under the current English law.
This Supreme Court ruling coincides with the Payment Systems Regulator’s upcoming implementation of new rules, which will require banks and payment companies to reimburse victims of Authorized Push Payment fraud. Such frauds cost victims nearly £500m in the previous year, according to UK Finance.
The court recognized the hardships experienced by fraud victims but stated that it is ultimately up to Parliament to decide who should bear the responsibility for these losses. The court acknowledged the new Financial Services and Markets Act, which provides for a mandatory reimbursement scheme for certain cases of domestic fraud.
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