Tanya Seevaratnam

Published 8 November 2023

Philipp v Barclays Bank UK PLC

Clarification of the duty of care owed by financial institutions to customers

In July 2023, the Supreme Court handed down its decision in Fiona Philipp v Barclays Bank UK Plc. In doing so, they have restricted claims against the banks by customers who have been victims of APP fraud and who want reimbursement.

The facts

In 2018, Mrs Fiona Philipp and her husband were deceived by fraudsters into instructing their bank, Barclays Bank, to transfer £700,000 from Mrs Philipp’s current account to bank accounts in the United Arab Emirates. The bank carried out those instructions and the money was lost. These types of fraud are referred to as “authorised push payment” (‘APP’) fraud because the victim is persuaded by fraudulent ways to authorise their bank to send a payment to a bank account controlled by the fraudster.  

Mrs Philipp brought a claim against Barclays Bank alleging that they owed her a duty under their contract with her or under common law not to carry out her payment instructions if (as alleged), the Bank had reasonable grounds for believing that she was being defrauded. Mrs Philipp relied on the ‘Quincecare’ duty of care.

The Quincecare duty

The Quincecare duty of care was established in 1992 and provides that a bank that receives an instruction from an agent of a customer to make a payment owes a duty to its customer not to carry out the 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. 

When a bank is put on such inquiry, it has a positive duty to take action and investigate the instruction and any other suspicious circumstances surrounding the account. If the bank fails to make these inquiries, it will be liable for a breach of the Quincecare duty. The result of that is that the customer then has the right to a claim in negligence against the bank. 

The decision

In the High Court, Barclays was granted summary judgment. However, the Court of Appeal accepted Mrs Philipp’s argument that a bank owes a duty to its customer of the kind alleged (although the court clarified that whether such a duty arose on the facts was a question that could only be decided at a trial). Consequently, it was held that this duty was not dependent on the bank being instructed by an agent of the customer.

The Supreme Court unanimously allowed an appeal by Barclays holding that the Bank did not owe the alleged duty to Mrs Philipp because the Quincecare duty does not apply to APP fraud. The distinction being that banks owe a duty to protect their customers against the acts of customers’ dishonest agents. In this particular case, Mrs Philipp and not her agent had instructed the bank.

The court held that a bank has a strict duty to act on a customer’s instructions and to do so promptly, and that it was not its duty to ‘concern itself with the wisdom or risks of its customer’s payment decisions’ unless there was an express contractual term requiring it to do so. It was acknowledged though that there is an implied condition that the bank will act honestly towards its customer.

However, Lord Leggatt did agree with the Court of Appeal that it is possible that a relevant duty of care could, in principle, arise where a bank acts upon a victim of APP fraud’s instructions. But he concluded that such a duty had not arisen in this case.


Whilst the Philipp v Barclays Bank decision came as a relief for the financial institutions who were concerned about a potential flood of litigation by customers who have been victims of APP fraud, of course, it was a blow for consumers. However, there is some recent legislation (Financial Services and Markets Bill 2023, which received royal assent on 29 June 2023 and should be effective in 2024) that should provide some, albeit limited, redress for victims of APP fraud.

Under this legislation, banks and other Payment Service Providers will be obliged to reimburse certain APP victims that have been deceived into authorising the transfer of funds via Faster Payments subject to conditions being substituted. The scope of this legislation will be considered in a subsequent article. One main exception is that it does not apply in cases involving international transfers. Further legislation and protection therefore is required in respect of international transfers.

There is still some hope for victims of fraud where the money has been transferred internationally as the Supreme Court did acknowledge that having been made aware of a fraud, the bank must act swiftly to recall the payment and a bank is likely to be held liable if they go ahead with transfers without making further inquiries where they have received reliable information from a source suggesting that the customer’s payment instruction has been procured by fraud. A victim may also have recourse to the court’s powers in respect of tracing and recovering stolen monies.

Whether you are a consumer or a financial institution, if you think you may have been affected by this decision, then please get in touch with Tanya Seevaratnam or Chris Ward.

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