The recent and somewhat surprising decision of the High Court in Suremime Limited v Barclays Bank plc [2015] EWHC 2277 (QB) is important to any financial institution that has agreed to conduct an FCA past business review or redress exercise.

In particular, the court has held that it is arguable that such institutions owe duties of care in tort, such that customers would have private law rights of action against the institution if the terms agreed with the FCA are not followed. However, the existence of such rights has not been finally determined by the court because the questions arose in the context of an interim application to amend Particulars of Claim. Below is a summary of this decision, together with practical implications for financial institutions.

Factual Background

In June 2012, Barclays (the “Bank“) agreed with the then FSA to carry out a review (the “FCA Review“) of its sales of interest rate hedging products since 1 December 2001 to customers who did not meet the ‘Sophisticated Customer Criteria’, and to offer redress as appropriate. In January 2013, following a pilot exercise, the Bank agreed amendments to the specifications of this FCA Review. The two agreements between the Bank and the FSA/FCA are referred to in this bulletin as the “FCA Agreements“.

In accordance with the FCA Agreements, the Bank categorised Suremime as a non-sophisticated customer and invited the company to participate in the FCA Review. Suremime agreed to participate, but did not accept the outcome.

Instead, Suremime pursued civil proceedings against the Bank claiming damages on the basis that the offered redress was inadequate, or alternatively damages for negligent misrepresentation, breach of contract and/or negligent advice, and/or negligent provision of information. In the further alternative, Suremime claimed that by virtue of section 1 of the Contracts (Rights of Third Parties) Act 1999, it had a right to enforce the terms of the FCA Agreements. Suremime later abandoned this last claim when the Bank disclosed a copy of the FCA Agreements, which contained a clause expressly excluding third party rights arising under the terms of the 1999 Act.

Application to amend the Particulars of Claim

Suremime sought permission to amend its Particulars of Claim to introduce new claims, on the basis that as a result of the FCA Agreements:

  1. A contract was created between the Bank and Suremime to conduct the FCA Review in accordance with those terms when Suremime accepted the Bank’s invitation to engage in the FCA Review and incurred expense in so doing;
  2. The Bank owed Suremime an equivalent duty in tort; and
  3. The Bank owed Suremime an equivalent duty in accordance with the principles in White v Jones [1995] 2 AC 207 (the leading case on ‘disappointed beneficiaries’) because the FCA would suffer no loss if the Bank breached the FCA Agreements, but Suremime (as an intended beneficiary of the FCA Review) would have suffered a loss.

The Bank objected to these new claims, arguing that they stood “no real prospect of success“, as per CPR 24.2 (the test which applies on an application for permission to amend).


Following arguments from both parties, the High Court refused permission for the first claim and granted permission to amend for the remaining two.

Contractual claim: The first claim was refused on the ground that it had no real prospect of success because it faced an “insuperable hurdle” of lack of consideration. The court reached this conclusion because the Bank made it clear that it was going to include the claimant’s swap in the process of the FCA Review, whether or not the claimant engaged with the fact finding exercise. There was no conditionality, meaning that Suremime’s expenses for responding did not amount to consideration.

Tortious claim: Suremime was granted permission to amend its particulars to pursue the second claim because the court decided that it was arguable that the Bank’s entry into the FCA Agreements and conduct of the FCA Review satisfied the relevant tests of: proximity of relationship; foreseeability of harm; absence of a public policy reason for not recognising such a duty; and assumption of responsibility to Suremime to conduct the FCA Review on those terms.

The court held that there was no bar necessarily imposed to the existence of a private law duty by the fact that Suremime could sue the Bank in relation to the original sale, or that such duties would provide customers who were otherwise time-barred with actionable rights.

White v Jones claim: Suremime was granted permission to pursue the third claim because the court was not persuaded that the principles in White v Jones had no potential application. The court focussed on the fact that any loss for failure to implement an FCA Review properly would lie with the customer who was, broadly speaking, the intended beneficiary of the FCA Review.


Although this was just an application to amend (so the court held that these points were merely arguable), it is of note that the court was prepared to find that a customer may have private law rights of action to enforce the terms of an FCA Review. The court additionally expressed the view that it was “arguably right” that a customer who is a “private person” already has a right of action under section 138D of FSMA to enforce the terms of an FCA Review.

If at trial such causes of action are determined to exist, it may mean that customers who are time-barred from commencing proceedings in relation to the sale of their original investment and are unsatisfied with their review outcome will be able to sue the relevant financial institution for damages because of alleged breaches of the review by that institution. This effectively provides them with a back-door route to bring a mis-selling claim out of time. It is submitted that this would be an undesirable and inappropriate outcome.

The practical implications of such causes of action highlight the importance of:

  1. Considering and negotiating carefully the terms of any undertaking agreed with the FCA;
  2. Record-keeping and processes throughout such a review to demonstrate that the specifications agreed with the FCA have been adhered to in respect of each customer; and
  3. Drafting settlement agreements that provide (to the extent possible) for full and final settlement of all claims.

It is of note that this decision confirmed that the defendant bank did not have any contractual obligation to the claimant owing to its participation in the review, which may be some positive news from the perspective of financial institutions.

Rupert Lewis
Rupert Lewis
+44 20 7466 2517
John Corrie
John Corrie
Senior Associate
+44 20 7466 2763
Celina McGregor
Celina McGregor
Senior Associate
+44 20 7466 7460
Ceri Morgan
Ceri Morgan
Professional Support Lawyer
+44 20 7466 2948