How much is a bank's duty of confidentiality worth to its customer?

How much is a bank's duty of confidentiality worth to its customer?

In the recent case of Primary Group v Royal Bank of Scotland, the High Court considered the extent of a bank's duty of confidentiality to its customer and the appropriate measure of damages for breach of that duty when the customer has suffered no direct loss.

What were the main issues in this case?

The main issues in this case were two-fold:

  • the extent of a bank's duty of confidentiality to its customer, and
  • the appropriate measure of damages that may be awarded to the customer for breach of the bank's duty when the customer has suffered no direct loss

What were the facts in the case?

Primary Group (the claimant) was the parent company of a group of companies which carried on business in the insurance industry. Primary UK was a wholly-owned subsidiary of Primary Group.

Primary UK was the borrower under a senior facilities agreement (SFA) entered into with Royal Bank of Scotland (RBS), a subsidiary of The Royal Bank of Scotland Group plc (RBS Group).

At the time when Primary UK and RBS entered into the SFA, Direct Line (then called 'The Royal Bank of Scotland Insurance Ltd') was also a subsidiary of RBS Group. Primary UK expressed concern about potential conflicts arising from RBS being a sister company of Direct Line (one of Primary Group's key competitors in the insurance market). It was alleged that RBS gave Primary UK assurances that all information provided by Primary UK to RBS would be kept confidential and would not be passed to Direct Line.

Not long after the SFA was entered into, Primary UK breached some of the undertakings contained in it and reported the defaults to RBS by a compliance certificate. In response, RBS instructed KPMG to conduct an Independent Business Review of Primary UK--code-named 'Project Medway'. RBS disclosed two of the reports produced under Project Medway (the Medway Reports) to at least

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About the author:

Meet Kate:

1. Banking & finance lawyer with experience in syndicated lending and project finance in London, Paris and Sydney

2. Likes yoga, DIY (although the output doesn’t generally reflect the input) and sunny climes

3. Thinks the law is very unlike how LA Law made it look

Kate is a solicitor specialising in banking and finance with particular emphasis on syndicated lending and project finance. She has acted for both borrowers and lenders on a wide range of finance transactions, often involving multiple jurisdictions.

Kate trained and qualified in the Debt and Derivative Securities team at Allen & Overy LLP. She later joined the Banking and Finance team at Freehills (now Herbert Smith Freehills) in Sydney. Most recently, she was in the Projects and Infrastructure team at Norton Rose LLP before joining LexisNexis. Kate is dual-qualified in England and Wales and New South Wales, Australia.