Barclays has won an appeal against a ruling it is liable to compensate customers who are the victim of bank transfer fraud.
In a landmark case, the UK Supreme Court ruled it was not for the bank to “concern itself with the wisdom or risks of its customer's payment decisions."
Supreme Court Judge George Leggatt added: "Where the customer has authorised and instructed the bank to make a payment, the bank must carry out the instruction promptly."
Fiona Philipp, who lost £700,000 through the transfer of money to bogus accounts in the UAE, accused Barclays of being remiss in its duty of care by allowing the move to go through.
Judge Leggat did, however, allow Philipp to sue Barclays for the steps it took to recover the money once it was notified.
Authorised push payment or APP scams cost customers almost £600mln in 2021 according to the Payment Systems Regulator and the ruling will save banks millions according to lawyers.
James Levy, a partner at Ashurst, told Reuters that the ruling placed the onus back on customers to ensure that payment instructions were bona fide.
"It closes the significant risk of what might otherwise have been a flood of litigation against the nation's banks brought by customers who have been victims of APP fraud," he said.
Consumer group Which? said while it acknowledged the Supreme Court’s decision, it was disappointed by "this missed opportunity to enhance consumer protections against bank transfer scams".
“Banks should do the right by their customers and proactively extend enforceable reimbursement to all payments, and government and regulators should act to close any loopholes to ensure all scam victims have equal and effective protection.”
Barclays said it welcomed a decision that provided "certainty and clarity" on an issue of law of public importance.