UK Banking litigation in focus: Recent cases and emerging trends

In the last 6 months, we have seen a range of important cases and developments before the Courts in the UK affecting financial institutions. In a webinar yesterday, Tom Clark, Benjamin Ng, Julia Schulman, Sunil Singh and Sharon Tong discussed recent English court decisions, emerging trends and cases to watch. 

There have been several recent cases where the courts have been called on to interpret contractual terms in unforeseen circumstances. Decisions in these cases favour contract certainty and show a desire by the Court to uphold the commercial bargain. 

In Standard Chartered v Guaranty Nominees, the court implied a contractual term to enable a long-term contract to function with the use of a court-determined reasonable alternative rate in place of a defunct LIBOR benchmark. This judgment should provide comfort for financial institutions dealing with a rump of "tough legacy" LIBOR contracts and provides some welcome guidance as to how the courts are likely to approach the exercise of contractual interpretation in this context. Decisions relating to force majeure and material adverse change clauses reflect the Court’s approach in upholding clear contractual provisions between the parties even if one party is substantially worse off due to a change in the economic environment or sanctions regime. In Macdonald Hotels v Bank of Scotland the court helpfully affirmed that the Braganza duty constraining the exercise of a contractual discretion does not oblige a party to act against its own commercial interests or even to balance its interests against those of a counterparty. And in a salutary reminder that contractual certainty is key, the Court declared a term requiring parties to use ‘reasonable endeavours’ to reach agreement was unenforceable for lack of certainty.

Following the Supreme Court decision in Philipp v Barclays, the decision in Santander UK v CCP Graduate School provides an important clarification of the duties owed by financial institutions to victims of APP fraud and rejects the notion of a “retrieval duty” owed by a receiving bank to a third-party victim. The Supreme Court in Philipp left open the possibility that such a duty might arise in contract but the High Court in CCP declined to extend an equivalent duty in tort. In addition to Quincecare duty claims, victims of fraud continue to use alternative causes of action in claims against banks, such as unjust enrichment (Terna v Revolut) and derivative actions where a victim is fraudulently induced to transfer funds to a defunct company (Hamblin v Moorwand). Victims can also pursue redress through the APP Fraud Reimbursement Scheme and/or a complaint to the Financial Ombudsman Service. These avenues of redress are subject to different considerations than the various causes of action in civil proceedings. So customer action to recover losses from fraud remains a key concern and complex issue for banks to manage.

In the context of voluntary customer redress schemes, the High Court rejected a judicial review challenge to the FCA’s decision not to expand the redress scheme on interest rate hedging products to more sophisticated customers (All-Party Parliamentary Group On Fair Banking, R (On the Application Of) v The Financial Conduct Authority). It was acknowledged that the FCA does not have a completely unfettered discretion and must comply with public law principles in decision-making. But, consistent with other recent decisions such as Bluecrest which we wrote about here, the FCA and other regulators have a broad discretion to exercise their powers within the parameters of their statutory duties. 

Following the Court of Appeal’s decision in Johnson v FirstRand Bank & others last year, the financial services industry awaits the important Supreme Court decision expected in July. The Court of Appeal found that a fiduciary duty or a duty to give disinterested advice apply in the motor finance context, and that forms of partial or non-disclosure of commissions would give rise to liability. If the Supreme Court upholds this view, the implications could be significant. The FCA is expected to implement a  redress scheme for affected customers, and there are potential wide-ranging implications if similar principles are applied to other financial products and services. 

A recording of the webinar is available on request.  Please contact one of the speakers listed below or your usual Freshfields contact to discuss any of these topics and other financial services decisions in more detail.

Tom Clark, Partner thomas.clark@freshfields.com 

Benjamin Ng, Senior Associate benjamin.ng@freshfields.com 

Julia Schulman, Senior Associate julia.schulman@freshfields.com 

Sunil Singh, Associate sunil.singh@freshfields.com 

Sharon Tong, Associate sharon.tong@freshfields.com 

Case citations:

Standard Chartered plc v Guaranty Nominees Limited & Ors [2024] EWHC 2605 (Comm)

Macdonald Hotels Ltd & Anor v Bank of Scotland plc [2025] EWHC 32 (Comm)

Santander UK plc v CCP Graduate School Ltd [2025] EWHC 667 (KB)

The All-Party Parliamentary Group On Fair Banking, R (On the Application Of) v The Financial Conduct Authority [2025] EWHC 525 (Admin) 

Johnson & Ors v FirstRand Bank & Ors [2024] EWCA Civ 1282