Martin Horne recently appeared for Santander in defence of a claim brought by a customer whose account had been frozen following suspicious activity. Insufficient detail was forthcoming in response to enquiries raised by the bank, thus it continued to freeze funds. The customer brought proceedings for release and damages. The case was heard over half a day in London. Martin successfully argued that the bank had acted in accordance with its Quincecare duty and all claims against the bank were dismissed.
The Quincare duty
The Quincare duty (derived from Barclays Bank Plc v Quincecare [1992] 4 All ER 363) is the duty of a financial institution to protect its customer when it is put on reasonable notice that there may be a fraud on the account. It requires the exercise of reasonable skill and care by a bank in carrying out its customer’s instructions.
Since it was established, the duty has been expanded upon and it has recently been the subject of several decisions in the higher courts.
Most recently, the Supreme Court heard the appeal of Stanford International Bank Ltd (in liquidation) v HSBC Bank PLC [2021] EWCA Civ 535 on 19 January 2022. Via its liquidators, Stanford International Bank (“SIB”) claimed (amongst other things) that HSBC was negligent in failing to spot a Ponzi scheme being run by SIB’s owner Mr Stanford (the Quincecare claim). Judgment is eagerly awaited. It is hoped the decision will provide certainty on the confines of the duty, the Court of Appeal having found that the bank’s duty is narrow and well-defined extending to its customer but not its customer’s creditors.