The Supreme Court judgment made this week in the case Fiona Philipp –v- Barclays Bank UK PLC related to the authorised push payment (APP) fraud perpetrated on Ms. Philipp amounting to £700,000, whilst it clarifies the liability of bankers towards their customers caught be APP fraud, it is likely to negatively impact on future victims of APP where money is unwittingly sent to fraudsters abroad.
Mr. & Mrs. Philipp were deceived by a fraudster, posing as an operative working for the Financial Conduct Authority in conjunction with the National Crime Agency, into paying money into bank accounts in the United Arab Emirates (UAE), which they believed to be safe, under the impression that the money would be invested in a lucrative investment scheme. It transpired that it was fraud and their money was lost. Legal proceedings were started by Mrs Philipp against Barclays Bank UK claiming that the Bank owed a duty of care, based on the decision in Barclays Bank plc v Quincecare Ltd  known as Quincecare duty, whereby a Bank must not carry out a customer's payment instructions if the Bank had reasonable grounds for believing the customer was being defrauded.
Joanna Bailey, head of the financial fraud litigation department, commented "banks are required to be sufficiently diligent in
observing when their customers' or their customers' agents' payment instructions appear to be different from of their normal pattern of payment or are being paid to a potentially suspicious third party account." Joanna further pointed out "the Supreme Court judgment in Mrs. Philipp's case may lead to many more cases of financial losses due to fraud. However, the Financial Services and Markets Act 2023, recently enacted, has defined a framework under which the banks should reimburse victims of APP fraud which supports the belief that Parliament and the various financial regulation authorities should outline and define the circumstances under which the banks should be obliged to compensate their customers for losses in APP fraud cases."
Giambrone & Partners' financial fraud litigation lawyers recognise that, whilst some banks have put in place their own procedures for establishing whether their customers are being duped into making payments by wrongdoers, others have not and are slow to act in attempting to claw back their customers' money when a fraud has been identified. In the case of Mrs. Phillip, she and her husband visited their branch to give instructions to transfer the money to an account in UAE. Mr. Philipp falsely claimed to have had past dealings with the company whose account the money was being sent to. The bank then telephoned Mrs. Philipp to obtain direct confirmation that the transfer of the money was to proceed, which she gave. The part of Mrs. Philipp's legal proceedings related to the slowness of Barclays Bank in attempting to recover her lost funds has been allowed to continue.
The latest report by UK Finance reveals that fraudulent authorised push payment (APP) losses amount to over £485 million with social media being the platform for three quarters of the online fraud. Giambrone & Partners financial fraud litigation team strongly urge individuals to be ultra-cautious particularly when they are requested to send money overseas. Our lawyers point out that if a person suggests that they are part of a respected organisation such as the FCA or the National Crime Agency, before parting with substantial sums of money, a check should be made to see if the information is, in fact, true. Also, the claims of high percentages of returns on investment are rarely correct.
Giambrone & Partners financial fraud litigation team leads in recovering money lost to financial fraud, enjoying substantial successes for our clients. in retrieving money lost to financial fraud.
Joanna Bailey heads our banking and financial fraud litigation department.. Joanna frequently leads the litigation against financial institutions involved in cryptocurrency trading disputes, as well as Forex investment issues and regulatory investigations and has some considerable success in retrieving our clients' funds lost in fraud.
She has developed a range of strategies both to find the assets of the individuals perpetrating the fraudulent schemes and restore the funds to our clients. As well as recognising culpability in the organisations facilitating (but not associated with the fraud), by failing to undertake adequate due diligence.
Joanna led the first case in Europe where proceedings were served on Persons Unknown connected with two digital wallets over the blockchain by non-fungible token or 'NFT' in a cryptocurrency fraud. Following this ground-breaking case Joanna was named as Lawyer of the Week in the Financial Times.
Joanna is highly experienced in high-value out-of-court settlement negotiations and has in-depth knowledge of the Civil Procedure Rules as well as English common law.
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