UK Supreme Court Clarifies The Scope Of Quincecare Duty For Financial Institutions Executing Customer Payments

• Published date: 19 July 2023
• Subject Matter: Finance and Banking, Litigation, Mediation & Arbitration, Criminal Law, Financial Services, Arbitration & Dispute Resolution, Trials & Appeals & Compensation, White Collar Crime, Anti-Corruption & Fraud
• Law Firm: Herbert Smith Freehills
• Author: Mr Gareth Thomas, Rachael Shek, Hannah Cassidy, Jojo Fan and Peter Ng

Earlier this month, the UK Supreme Court in Philipp v Barclays Bank UK plc [2023] UKSC 25 addressed the scope of the Quincecare duty in the context of an "authorised push payment" (APP) fraud, where the victim was tricked into willingly authorising the bank to transfer funds into an account controlled by the fraudster.

The UK Supreme Court's judgment confirms that the general duty of skill and care owed by a bank when processing payment instructions from a customer is limited and applies to "interpreting, ascertaining, and acting in accordance with the instructions" of the customer. This means that the duty only arises where the validity or content of the customer's instruction is unclear or leaves the bank with a choice about how to carry out the instruction. On the other hand, where the bank receives a valid payment order, the bank's duty is simply to execute the order by making the requisite payment, and the duty of reasonable skill and care will not apply. The UK Supreme Court further confirmed that the Quincecare duty is an application of the general duty of care and skill, which only comes into play where an agent of the customer...