LONDON (Reuters) – The UK arm of Spain’s Banco Santander on Tuesday won its bid to throw out a lawsuit that had alleged lenders have a duty to try and retrieve funds stolen by customers that turn out to be fraudsters.
Santander UK was sued at London’s High Court in 2022 by teacher training provider CCP Graduate School, which paid around 415,000 pounds (around $537,000) from its Natwest account into a Santander account operated by fraudsters.
CCP Graduate School said it was the victim of an authorised push payment (APP) fraud, a scam where people are tricked into sending money to a fraudster posing as a genuine payee.
Thousands of individuals and businesses fall victim to APP frauds in Britain each year, with UK Finance saying there were more than 232,000 cases in 2023. Tougher new compensation rules came into force in October 2024.
CCP Graduate School’s lawyers alleged Santander arguably had a duty to try and retrieve the funds, relying on a 2023 Supreme Court ruling in a claim against Barclays.
The Supreme Court had thrown out most of the case against Barclays, but ruled that banks can arguably have a duty to their customers to try and recover funds paid out due to fraud.
CCP Graduate School argued its case against Santander should therefore be allowed to continue, but the High Court threw out the case. Its lawsuit against Natwest was dismissed last year.
Judge Jennifer Eady ruled there was no “freestanding duty upon a bank to take positive steps to unwind harm already caused to a third party” who was not its customer.
She said if CCP Graduate School was correct, banks would have to respond to an allegation of APP fraud by contacting all other banks the money had been transferred to and seek an immediate recall or somehow not allow the money to be moved.
Given the millions of payments processed every month, banks would face “an unacceptable burden on banks going outside their contractual obligations with their customers”, she said.
Santander did not immediately respond to a request for comment.
(Reporting by Sam Tobin; Editing by Susan Fenton)
