UK Banking litigation in focus: Navigating recent cases and trends

Over the past six months, we have seen a number of significant banking litigation cases before the English courts and other legal developments which impact financial institutions. These were covered in a recent webinar given by Tom Clark, Emma Probyn, Anthea Bowater, Kevin Whibley, Julia Schulman, Lei Yi Wong and Emma Leung from our Financial Institutions Disputes team. 

In the consumer finance sphere, in Hopcraft & Another v Close Brothers Ltd the Supreme Court reversed the Court of Appeal’s finding that car dealers acting as credit brokers owed fiduciary duties to customers when arranging motor finance, which were breached when the dealer received either wholly or partially undisclosed commissions. The Court instead found that fiduciary duties required a clear undertaking of single-minded loyalty, which was inherently incompatible with a dealer’s role in the arrangement and obvious commercial interest in making a sale. Meanwhile, in Howard & Anor v GE Money Mortgages Ltd & Anor, the Court confirmed that the limitation period for an unfair relationship claim under s.140A of the Consumer Credit Act 1974 (s.140A) runs from the end of the credit relationship rather than the agreement date, allowing such claims even when fiduciary claims are time-barred. 

Sanctions-related disputes remain prominent. In Celestial Aviation Services Limited v Unicredit Bank GmbH, London Branch, the Court confirmed the broad scope of Russia (Sanctions) (EU Exit) Regulations 2019 (the UK Russia Regulations), having regard to the wider purpose of the UK Russia Regulations as a “relatively blunt instrument” intended to capture all objectionable arrangements. Celestial’s appeal to the Supreme Court was heard last week, and we expect judgment to be handed down in 2026. And in LLC EuroChem North-West-2 v Société Générale SA, the Court refused to enforce payment obligations under on-demand bonds against issuing banks where performance was illegal due to sanctions, finding that “ownership” by a designated person under EU sanctions included being a beneficiary of a discretionary trust. 

The aftermath of the Supreme Court’s decision in Philipp v Barclays Bank UK plc continues to be explored, with appeals on whether a receiving bank may owe a tortious duty of retrieval where the paying party is not a customer of the bank (Santander UK plc v CCP Graduate School Ltd) and on whether a sending bank owes a duty of retrieval once notified of fraud (Hamblin v Moorwand) to be heard in 2026. In Babco Chemicals Inc v HSBC UK Bank plc, the High Court allowed documents obtained under a Norwich Pharmacal Order to be used against the disclosing bank itself in an authorised push payment fraud claim, notwithstanding an undertaking in the order that the documents would not be used beyond pursuing the fraudster. The Court found it would be contrary to the interests of justice to prevent the use of the documents for the broader purpose sought. 

The abolition of the longstanding Shareholder Rule (which granted shareholders access to certain otherwise privileged documents) by the Privy Council in Jardine Strategic Limited v Oasis Investments II Master Fund Ltd& Ors No 2 (Bermuda)is a rare decision bolstering privilege. This will likely be viewed as a welcome decision by companies, enabling them to undertake M&A work, deal with investigations and defend litigation without the fear of not being able to assert privilege in shareholder litigation in respect of privileged material which was created prior to the shareholder dispute arising. 

R (CIT (an anonymised company)) v The Financial Conduct Authority (No. 1) is the first judicial review of a decision by the Financial Conduct Authority (FCA) to name the subject of an investigation following the changes to the FCA Enforcement Guide this summer. The challenge was unsuccessful, albeit CIT is seeking the Court of Appeal’s permission to appeal. The judgment shows that the FCA decided in favour of publicity, on grounds of consumer protection.  

Looking ahead, the Commercial Court’s Pilot Scheme for public access to court documents such as witness statements, skeleton arguments, and expert reports will be in place from 1 January 2026. This will apply to existing and new proceedings in the Commercial Court, the London Circuit Commercial Court, and the Financial List. The scheme is expected to prompt greater focus on what is presented in court, and may encourage further strategic mentions of documents by litigating parties.

In the context of contractual interpretation, there have been a number of decisions considering the exercise of contractual discretion and obligations in the financial institutions context, which overall demonstrate that the courts are looking to hold parties to their original bargain wherever possible. For example, in HNW Lending Ltd v Lawrence, the Court held that a non-party can enforce a contractual term under the Contracts (Rights of Third Parties) Act 1999 even if the agreement conferred no direct benefit on the third party, as a clause in the loan agreement had intended to grant the security agent enforcement rights equivalent to those of the lender. The Court of Appeal’s decision on this case is now awaited. Further, in considering the meaning of a clause amending the priority of creditors under a loan agreement, the Court held that there was sufficient ambiguity in the clause itself to warrant a wider exercise in ascertaining its true meaning and effect, and that exercise considered the rest of the agreement and commercial common sense (JAK Property Jersey Ltd v Together Commercial Finance Ltd).

In Linear Investments Ltd v Financial Ombudsman Service Ltd, the Court considered a judicial review application of the Financial Ombudsman Service (FOS)’s decision that found an investment firm liable for mischaracterisation of a retail client as an “elective professional client” under the FCA’s conduct of business rules. While the Court largely upheld the FOS’s decision, it found that the FOS had erred in law by failing to consider the customer’s contributory negligence in determining the value of the award – marking a rare interference by the Court in the FOS’s broad discretion to determine what is “fair and reasonable”. 

On undue influence, the Supreme Court has widened the circumstances in which the Etridge Protocol should be used to include non-commercial hybrid transactions (Waller-Edwards v One Savings Bank plc). This would encompass situations where, on the face of the transaction, there is a more than a de minimis element of borrowing that serves to discharge the debts of one of the borrowers and so might not be to the financial advantage of the other.

A copy of the webinar slides 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 

Emma Probyn, Partner emma.probyn@freshfields.com

Anthea Bowater, Counsel anthea.bowater@freshfields.com 

Kevin Whibley, Counsel kevin.whibley@freshfields.com 

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

Lei Yi Wong, Associate leiyi.wong@freshfields.com

Emma Leung, Associate emma.leung@freshfields.com