In April 2022 we summarised the Court of Appeal decision in Philipp v Barclays Bank UK plc  EWCA Civ 318 in our article entitled “Authorised Push Payment fraud and the duties owed by the reasonably prudent banker”. This decision provided helpful clarity on the scope of bank’s Quincecare duties (essentially a bank’s duty to “observe reasonable care and skill” when carrying out a customer’s orders), confirming that where a bank has reasonable grounds for believing that an order to transfer funds is an attempt to misappropriate them, the bank’s duty to make enquiries can extend to instructions from individual personal banking customers.
The new Financial Services and Markets Bill (the Bill) was announced in the Queen’s Speech at the state opening of Parliament on 10 May 2022. The purpose of the Bill is to maintain and enhance the UK’s position as a global leader in financial services following its departure from the European Union. The Bill includes a power for the Payment Systems Regulator (the Regulator) to require banks to reimburse victims of authorised push payment (APP) fraud.
Reimbursement of victims – what does it mean?
The Bill will include more protections for those investing or using financial products and measures to support the victims of financial fraud and scams. In the latter case, the Bill will give the Regulator powers to, for example, set rules about when banks will have to reimburse customers who experience APP fraud and the reimbursement amounts. These rules have not been fully fleshed out – but it is hoped that they will encourage banks to review (and, if needed, enhance) their current checks and processes relating to online payments/transfers.
The Bill – next steps
The Bill builds on the Financial Services Act 2021. This act was the first step in amending the UK’s financial regulatory regime post-EU exit by revoking EU law on financial services and replacing it with law and regulation designed specifically for the UK financial landscape. The Bill has not been drafted yet. The intention is to introduce it later in 2022.
Andrew Dodds, a partner in the banking and finance team at Stevens & Bolton, comments that:
“We expect banks, their customers and other market participants will follow closely how the Bill develops in the coming weeks and months. Introduction of the Bill will likely see banks trying to strike the right balance between carrying out customer instructions and ensuring that they don’t fall foul of the rules requiring them to reimburse customers that have been subject to APP fraud.”