No duty of care owed to customers in connection with FCA past business reviews
Produced in partnership with Herbert Smith Freehills LLP of John Corrie, Ben Goodman, Dan Eziefula and Ceri Morgan
No duty of care owed to customers in connection with FCA past business reviews

The following Financial Services guidance note Produced in partnership with Herbert Smith Freehills LLP of John Corrie, Ben Goodman, Dan Eziefula and Ceri Morgan provides comprehensive and up to date legal information covering:

  • No duty of care owed to customers in connection with FCA past business reviews
  • CGL—background
  • CGL Group—the Court of Appeals judgment
  • Cameron Developments—background
  • Cameron Developments—judgment
  • Practical considerations for financial services firms

Since 2015, the courts have grappled with the claimant argument that financial institutions owe duties of care in tort directly to their customers in connection with their conduct of the past business review of interest rate hedging product sales announced by the Financial Conduct Authority (FCA) (then Financial Services Authority (FSA)) in 2012 (the ‘Review’). A number of contradictory High Court decisions followed.

However, in 2017, the Court of Appeal clarified—in three conjoined appeals—that such claimants have little prospect of bringing such claims against the banks conducting that Review. In CGL Group Limited & Ors v Royal Bank of Scotland plc & Ors the Court of Appeal found it was not even arguable that the defendant banks in the three linked cases owed tortious duties to the claimants to conduct the Review with reasonable skill and care. This was primarily because such a duty would undermine the statutory and regulatory regime, which grants customers rights to bring claims against financial institutions only in certain defined circumstances. Such claims should now be amenable to summary judgment.

In addition, the separate High Court decision in Cameron Developments (UK) Limited v National Westminster Bank plc & Ors suggests that customers who accept ‘basic redress’ under the Review will be treated as having settled all claims relating to the way in which the bank conducted the Review, where the