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Barclays Prevails in Landmark UK Supreme Court Ruling on Customer Fraud Responsibility

Fraud, Bribery & CorruptionBarclays Prevails in Landmark UK Supreme Court Ruling on Customer Fraud Responsibility

In a significant legal ruling, Barclays has emerged victorious in a UK Supreme Court appeal, shedding light on the extent of a bank’s responsibility to safeguard customers from fraudsters. The case, closely watched by legal experts, may help curb a surge of similar litigations.

The lawsuit was filed by Fiona Philipp, a music teacher and longtime Barclays customer, in 2020. She fell victim to an elaborate authorized push payment (APP) fraud and unwittingly transferred £700,000 ($906,000) to accounts in the United Arab Emirates (UAE).

APP frauds have become the most prevalent form of payment fraud in the UK, costing customers £583 million ($752 million) in 2021, marking a 39% increase from the previous year, according to the Payment Systems Regulator (PSR). Authorities have been striving to make banks play a pivotal role in preventing such fraud.

The court acknowledged the significant hardships faced by fraud victims but suggested that the responsibility for losses should be considered by Parliament. It noted that the new Financial Services and Markets Act includes provisions for a mandatory reimbursement scheme in certain cases of domestic fraud. However, overseas payments would not be covered by this proposed scheme.

Barclays welcomed the decision, stating that it provided “certainty and clarity” on this important legal matter.

While Barclays won on the issue of disregarding customer instructions, the Supreme Court allowed Philipp to pursue an alternative case against the bank, alleging that Barclays failed to take adequate steps to recover the transferred money in the UAE.

By FCCT Editorial Team

Disclaimer: The views expressed in this article are independent views solely of the author(s) expressed in their private capacity.

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