The “pig butchering” scam is not new but has enjoyed a rapid rise in recent years. So much so, that virtually everyone reading this blog will have been an intended mark at some point, probably without knowing it. Indeed, if you have ever received a message from an unknown number with a random message that apparently wasn’t intended for you such as “sorry I missed my appointment” or “Hi mum, this is my new number” then that probably wasn’t an innocent mistake, it was the start of the long con of the 2020s.
Following on from our recent Blog post about UK Finance’s half-yearly fraud update, in an article published today with the International Banker we look at the increasingly common authorised push payment (APP) fraud and consider what can be done and who might be liable?
The Supreme Court has today provided important clarification on when “deliberate concealment” or “deliberate commission of a breach of duty” by a defendant will extend the limitation period for bringing claims.
The decision is bad news for financial services firms affected by PPI mis-selling claims and other claims in which firms are accused of making secret commissions on financial products, such as interest rate swaps and other derivatives.
The law on limitation per the Supreme Court
Under section 32(1)(b) of the Limitation Act 1980 (deliberate concealment): A fact will have been concealed if the defendant has kept it secret from the claimant, either by taking active steps to hide it or by failing to disclose it. The Supreme Court has overturned as wrong the Court of Appeal finding that a claimant needs to establish that the defendant was under a legal, moral, or social duty to disclose the fact, and/or that the defendant knew the fact was relevant to the claimant’s right of action.
All that is required is that the defendant deliberately ensures that the claimant does not know about the fact in question and so cannot bring proceedings within the ordinary time limit. The concealment is deliberate if the defendant intended to conceal the fact in question. The Supreme Court overturned as wrong the Court of Appeal finding that deliberately can be equated with recklessness. It is now clear that recklessness plays no part in the assessment.
Under section 32(2) of the Limitation Act (deliberate commission of a breach of duty): A claimant must show that the defendant knew it was committing a breach of duty or intended to commit a breach of duty. Again, the Supreme Court rejected the submission that “deliberate” includes “reckless”, so that a defendant could be said to commit a breach of duty deliberately if it realised that there was a risk that what it was doing might be a breach of duty and took that risk in circumstances where it was objectively unreasonable for it to do so.
This is an important simplification of the law relating to the postponement of limitation in cases involving deliberate concealment and deliberate commission of breach of duty. As the Supreme Court acknowledged, it may have wide application, especially in the field of PPI mis-selling claims.
In Potter’s case, the claimant succeeded through section 32(1)(b) and established a postponed limitation date. The defendant’s knowledge of the secret commission, coupled to the fact of non-disclosure to the claimant, was enough to satisfy the Supreme Court of deliberate concealment under the newly simplified test. The running of limitation was therefore postponed until the moment of disclosure by the defendant to the claimant of the fact of the secret commission. From that point the claimant then had six years to issue proceedings.
This scenario is likely to play out frequently for claimants in various types of cases in which claimants allege that secret commissions have been made by financial services firms in relation to the sale of financial products. It now looks likely that there will be a fourth act to the defence of PPI mis-selling claims, as there is now certainty over the law on the postponement of limitation periods rendering those claims viable. Secret commission claims relating to other products and services such as interest rate swaps, other derivatives, loans, mortgages and the like that would otherwise be time-barred may also get a new lease of life.
Canada Square Operations Ltd v Potter  UKSC 41
UK Finance has recently published its half yearly fraud update for the first half of 2023, its findings are based on data reported to it by its members, which include financial providers, credit, debit and charge card issuers and card payment acquirers.
The recent interim judgment of Therium Litigation Funding A IC v Bugsby Property LLC  EWHC 2627 (Comm) appears to give us an early indication of what might become key battlegrounds between Third-Party Funders and certain funded litigants in the wake of the Supreme Court’s impactful determination in R (PACCAR) v Competition Appeal Tribunal  UKSC 28.
On 12 July 2023, the Supreme Court delivered its widely anticipated judgment in Philipp v Barclays Bank UK PLC. In doing so, the Court has gone back to basics to explain the basis for and scope of a bank’s duty to its customers, and has brought the Quincecare duty back to a narrower footing.
By overturning the Court of Appeal (covered in our previous blog here), and varying the original High Court ruling (which we addressed in another previous blog post), the Supreme Court has again shown that it will not hesitate to redraw the boundaries of duty where it deems them to have been overly broadened. The case also offers useful clarification on the extent of the Quincecare duty, and of banks’ obligations to their customers more generally.
The decision should be a welcome one for banks, notwithstanding that the Financial Services and Markets Act 2023 will soon provide victims of many APP frauds with a different route to recompense (as well as the Contingent Reimbursement Model Code).
Earlier this year, the Financial Conduct Authority published its analysis of its financial promotions data for 2022. That report sheds some interesting light on the FCA’s actions taken against authorised firms, and unauthorised entities and individuals, for breaches of financial promotion rules.
The standout message is clear – the FCA has significantly increased its interventionist activity, in response to what the FCA has said is poor financial promotions compliance.
The Financial Conduct Authority confirmed last month that the limit for compensation that can be awarded by the Financial Ombudsman Service (“FOS”) will be raised from £375,000 to £415,000, for complaints made after 1 April 2023 relating to acts or omissions on or after 1 April 2019 – an increase of over 10%.
A lower limit of £190,000 applies to any complaints made from 1 April 2023 relating to events that occurred prior to 1 April 2019 – again an increase of over 10%, from £170,000 in 2022.
Since July 2022 when the FCA published its rules and guidance to implement the Consumer Duty, much ink has been spilled on what it will mean for affected firms. Now, with the clock ticking down to implementation on 31 July 2023, the FCA has published the findings of its review of a number of larger firms’ plans for complying with the Duty.
“Could do better” is the overall mark on the industry’s homework so far.
What will the Consumer Duty involve?
To recap, the reforms will involve:
- An overarching Consumer Principle requiring firms to act to deliver good outcomes for retail customers when selling products and services.
- Cross-cutting rules providing clarity on FCA expectations, which will require firms to act in good faith, avoid causing foreseeable harm, and enable and support retail customers to pursue their financial objectives.
- Rules relating to the four outcomes the FCA wants to see, around: appropriateness of products and services; transparent pricing and fair value; consumer understanding; and consumer support.
In August 2022, the FCA released a policy statement introducing improvements to the appointed representative (“AR“) regime. In its policy statement, the FCA provides feedback on its earlier consultation, and sets out new rules to make authorised financial firms more responsible for their ARs.
In its press release, the FCA says that whilst some principal firms do effectively ensure their ARs comply with rules, “many do not adequately oversee the activities of their ARs“. It says its new rules will “prevent consumers being mis-sold or mis-led by ARs and will prevent misconduct by ARs undermining markets operating fairly and safely“.