In the latest decision to consider the Quincecare duty, the Board of the Privy Council has confirmed that the duty is limited to protecting the customers of a bank, and does not extend to protecting any third party beneficiaries of its customer’s accounts. In doing so, the Board dismissed a claim by an investment fund against a bank for an alleged breach of duty to protect it from losses caused by the fraudulent misappropriation of monies from certain bank accounts which belonged beneficially to the fund: Royal Bank of Scotland International Ltd (Respondent) v JP SPC 4 and another (Appellants) (Isle of Man) [2022] UKPC 18.

Historically, the Quincecare duty has arisen where a bank receives a payment instruction from an authorised signatory of its customer, and executes the order, in circumstances where (allegedly) there were red flags to suggest that the order was an attempt to misappropriate the funds of the customer. The Board rejected firmly the suggestion that the Quincecare duty is owed to anyone except the customer of a bank, or that the existing boundaries of the duty should be extended to protect third parties.

For more on the decision see this post on our Banking Litigation Notes blog.