Case law update: High Court Judgment in CCP Graduate School v NatWest and Santander

The High Court considers a retrieval duty in the context of APP Fraud

The High Court's judgment in CCP Graduate School v NatWest and Santander concerning Authorised Push Payment Fraud considered the possibility of a so-called "Retrieval Duty" on the part of a bank or payment service provider ("PSP") in relation to payment (or receipt) of misappropriated funds.

This alleged duty centres on a PSPs alleged failure to track or retrieve funds when put on notice of fraudulent or illegal activity after a misappropriation occurs.

The current landscape

As a reminder, the so-called Quincecare duty is, in fact, part of a bank's general duty of care to act in accordance with its customer's instructions and can require it to refrain from executing an instruction where it has grounds to believe that an instruction is an attempt to misappropriate a customer's funds.

The Supreme Court confirmed in Philipp v Barclays Bank that where a customer unequivocally authorises and instructs a bank to make a payment (as is the case in the instance of APP fraud), it is not possible to say - in the absence of any express or implied term to the contrary - that a Quincecare-type duty applies. Further background of the case is considered here.

Furthermore, whilst a PSP does have a duty to exercise reasonable care and skill in executing a payment instruction, this only applies in so far as the payment services contract gives the PSP any latitude in how a service is to be carried out. Given this potential avenue for recovery has been closed in the context of APP claims, fraud victims have naturally explored alternative claims against PSPs.

A retrieval duty?

In CCP Graduate School v (i) NatWest and (ii) Santander, in considering the School's claim for £415,909.67 lost as a result of fraudulently induced payments in September and October 2016, Master Brown restated that a Quincecare-type duty will not interfere with the bank's duty to action payments for customers where clear and unequivocal instructions are given.

However, whilst the claim against NatWest was struck out because the alleged cause of action accrued upon the payment date(s) which were more than six years before the date of the issued claim form (if not more than six years from the discovery of the fraud), the judge considered that a proposed amendment to the claim, which put forward the "Retrieval Duty" argument (made in response to the strike out application), could have had a real prospect of success at trial. 

The basis for the claimant's amendment was that NatWest were put on notice of matters calling for investigation and action to retrieve the funds. In particular, a fraud investigator for a third-party bank contacted NatWest with concerns about dissipated funds moving into their own accounts, thus putting NatWest on notice of fraudulent activity. Master Brown commented:

"Lloyds Bank appears to have taken a number of steps – and informed the First Defendant (NatWest) of possible fraud. Why was more not done by the First Defendant (and for that matter, the Second Defendant?) There is at least a reasonable inference that more could have been done by the other banks in the process."

That an action based on a purported "Retrieval Duty" is capable of resisting an application for strike out (albeit on the particular facts of the matter) presents a new risk for PSPs. Where such an action cannot be easily disposed of at a summary stage, there is a prospect of a volume of similar claims requiring costly case management.


As the originally pleaded claim against NatWest failed due to statutory limitation periods, a full exploration of the scope and application of a so-called 'Retrieval Duty' upon the fraud victim's paying bank will not be taken further at this stage. However, that is not the end of this matter, as it was accepted that the so-called Retrieval Duty could apply to the second defendant (and the recipient bank) Santander and the recipient bank - despite it having no direct contractual relationship with the Claimant.

Whilst PSPs and victims await how the application of this potential duty plays out, in the meantime, to manage claims/complaints in a cost effective manner all parties would value an early exploration of the question: could anything have been done differently to recover or freeze misappropriated funds?

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