Court dismisses Santander's duty of care appeal

Introduction

The High Court has ruled on a significant case concerning the duty of care owed by banks in instances of authorised push payment (APP) fraud. The case involved Santander UK Plc ('Santander') and CCP Graduate School Limited ('CCP'), with the judgment handed down by Mrs Justice Jennifer Eady DBE on 25 March 2025.

Background

This case arose from an APP fraud where CCP was induced to make payments from its account with NatWest to an account held at Santander in the name of PGW Consultants Limited. The total amount transferred was £415,909.67, which was subsequently moved to other accounts. CCP sought damages against both NatWest and Santander, arguing that Santander owed a duty of care to retrieve the funds.

The Appeal

Santander appealed against the decision of Master Brown, who refused to strike out CCP's claim. Santander argued that it owed no duty of care to CCP, a non-customer, to retrieve funds lost to fraud. The appeal focused on whether a 'duty of retrieval' could be imposed on a receiving bank in such circumstances.

Legal Arguments

Santander contended that there was no assumption of responsibility towards CCP and that imposing a duty would conflict with its obligations to its own customer. CCP, however, argued that the duty of retrieval, as discussed in Philipp v Barclays Bank UK plc, should extend to receiving banks once notified of a fraud.

Judgment

Mrs Justice Eady ruled that Santander owed no duty of care to CCP. The court found that the duty of retrieval identified in Philipp was an extension of a bank's contractual obligations to its own customer and did not apply to non-customers. The court emphasised that such duties should be determined by regulators and legislators, not the courts.

Implications

This ruling reinforces the principle that banks are not liable to third parties for frauds perpetrated by their customers unless there is a direct contractual relationship. The judgment highlights the challenges in extending tortious duties in the banking sector, particularly in the context of APP frauds.

Conclusion

The High Court's decision underscores the importance of clear legislative and regulatory frameworks in addressing the complexities of APP fraud. The ruling clarifies the limits of a bank's duty of care, focusing on the contractual relationship with its customers.

Learn More

For more information on data protection and related legal responsibilities, see BeCivil's guide to English Data Protection Law.