Don’t push it… Quincecare duty clarified

One of the most eagerly awaited Judgments in recent years was handed down in Philipp v Barclays Bank last week, finding that Barclays did not owe a “Quincecare” duty to two of its customers who were victims of an Authorised Push Payment (APP) fraud, prompting a huge sigh of relief from the banking community and clarity amongst lawyers as to how far that duty extends.

The Quincecare duty was born in 1992 out of a case by that name (also involving Barclays), and had previously been understood to oblige a bank, who receives an instruction from an agent of the customer to make a payment, not to carry out that instruction if the bank has reasonable grounds for believing that the agent is defrauding the customer by using the money for the agent’s own purposes.

Dr and Mrs Philipps sought to persuade the High Court (unsuccessfully), the Court of Appeal (successfully), and the Supreme Court (ultimately unsuccessfully) that the duty should be extended and, as such, that Barclays were obliged not to carry out her specific and repeated instructions where it had reasonable grounds for believing she was being defrauded (she and her husband had in fact been deceived by criminals into transferring £700,000 from Mrs Philipp’s current account with Barclays to bank accounts in the UAE – an APP fraud).

The Supreme Court refused to extend the duty and found that a bank does not have to “concern itself with the wisdom or risks of its customers’ payment decisions” unless there was an express contractual duty to do so. The Quincecare duty is concerned only with dishonesty on the part of a customer’s agent and not where there is clear and unequivocal authority to instruct the bank.

Whilst banks will see this Judgment as an outright success which absolves them of a huge and potentially costly burden; customers should not feel too downbeat. Banks continue to owe a duty to protect their customers against the acts of dishonest agents (which extends to a chairman, directors, shareholders, joint account holders and others), and the Philipps’ argument, that Barclays were under a duty (which it breached) to promptly seek to claw back payments when the fraud was reported, lives to fight another day and will be tried back in the High Court. For APP fraud, however, customers must look to parliament and the regulators to protect them from these increasingly prevalent scams.