Disputes Yearbook 2025:
Banking litigation

Broker commission claims

Over the summer, the Supreme Court delivered a decision that marks a defining moment for broker commission disputes (see here). The Supreme Court held that dealer brokers in motor finance transactions do not owe fiduciary duties to their customers, overturning the Court of Appeal’s earlier finding to the contrary. As a result, the court dismissed all claims against the lenders based on common law bribery and accessory liability. However, in one of the appeals, the Supreme Court found that the relationship between the consumer and their lender was unfair under section 140A of the Consumer Credit Act 1974 (CCA) and ordered the lender to pay the commission amount to the customer with interest. The judgment confirms that future broker commission claims are likely to be confined to the statutory route and provides helpful guidance on the factors relevant to unfairness. Our special edition podcast explores the practical implications of this decision and its wider impact on the industry (see here). 

In parallel, the Financial Conduct Authority (FCA) has consulted on a proposed industry-wide redress scheme for motor finance customers and intends to launch the scheme in early 2026. The scheme will cover regulated motor finance agreements that lenders entered into between 6 April 2007 and 1 November 2024, where the lender paid commission to the broker. Our FSR colleagues have released a podcast discussing the scope of the scheme, what firms should be thinking about and what this means for the FCA's approach to redress more generally (see here).

In the past year, the courts have scrutinised other key aspects of claims based on breach of fiduciary duty. The Supreme Court confirmed that fiduciaries must account for profits they make from their position, even if they would have earned those profits without breaching their duty (see here). Meanwhile, the Court of Appeal confirmed that dishonesty is an essential element in any claim based on accessory liability for a broker's breach of fiduciary duty (see here). Fiduciary obligations is a complex area of the law and this appellate-level clarification is helpful for future claims. 

The litigation landscape for broker commission cases continues to be shaped by procedural developments. The County Court confirmed that 5,800 motor finance claimants could use omnibus claim forms and did not need to issue separate claim forms (see here). In a separate decision, the County Court reviewed the limitation period for unfair relationship claims under s.140A CCA, highlighting that even if the limitation period in respect of a breach of fiduciary duty claim has expired, there may be a risk that the limitation period for an unfair relationship claim has not (particularly where the credit relationship is ongoing, has been assigned or has recently ended) (see here). These decisions could increase the volume of future broker commission claims. 

Impact of sanctions

Sanctions litigation continues to test the boundaries of contractual enforcement and jurisdictional strategy. During the summer, the High Court found in favour of several banks, ruling that Russian sanctions prohibited payment under on-demand bonds (see here). In its analysis, the court examined several complex issues, including what amounts to illegality in the place of performance, so that a contract will be prevented from being performed under the so-called Ralli Bros principle. The judgment also considers the role of national competent authorities and their determinations. Ultimately, the decision confirms that parties must comply with sanctions, even where contractual obligations exist.

The courts have also addressed the procedural consequences of sanctions. The High Court declined to vary an interim payment order (see here) and refused to set aside a statutory demand issued by a "designated person" (see here), reaffirming that sanctions do not automatically frustrate enforcement rights or encourage non-compliance with court orders. In parallel, both the Court of Appeal and the High Court granted banks’ requests to revoke final anti-suit injunctions to avoid Russian court-imposed penalties, while preserving declarations on jurisdiction (see here and here). These decisions reflect a pragmatic judicial approach, as the courts balance the need to uphold English jurisdiction with the realities of international enforcement risk under sanctions regimes.

Authorised Push Payment (APP) fraud

The courts continue to refine the scope of duties owed by payment service providers (PSPs) to their customers when processing payments. The boundaries of these duties have been tested by claims brought by APP fraud victims, particularly since the Supreme Court's decision in Philipp v Barclays Bank UK plc [2023] UKSC 25 (see here), which effectively barred so-called Quincecare claims.

In the spring, the High Court considered the novel "retrieval" duty, requiring banks to take adequate steps after being alerted to a fraud to recover payments made (first recognised in Philipp). The court ruled that receiving PSPs do not owe a retrieval duty to non-customers, and rejected attempts to expand the so-called Quincecare duty to situations where no contractual relationship exists between a bank and the third-party victim (see here). However, the court accepted that the retrieval duty is a further potential application of the general duty of care owed by a sending bank to interpret, ascertain and act in accordance with its customer's instructions. This was reconfirmed in a subsequent High Court decision, finding that the retrieval duty was arguable in a claim by a customer against its sending bank (see here). It would be helpful for the financial services industry to see this point tested in a substantive trial judgment, as so far it has only considered to the strike-out standard.

In another notable development, the High Court permitted APP fraud victims to pursue a "derivative" Quincecare claim against a PSP, bringing the action in place of the PSP's corporate customer, which was the vehicle used for the fraud (see here). Separately, the High Court allowed a potential claimant to use documents obtained via a Norwich Pharmacal Order in proceedings against the disclosing bank, to evidence its conduct as a receiving bank in an APP fraud case (see here). These decisions signal that claimants continue to bring novel APP fraud claims against both sending and receiving banks, notwithstanding the UK's mandatory APP fraud reimbursement scheme which came into force on 7 October 2024.

Class actions against banks 

The courts continue to scrutinise the procedural mechanisms used by claimants to bring collective claims against financial institutions. The Court of Appeal rejected an attempt to use CPR 19.8 representative proceedings for a securities class action, and confirmed that the courts will not allow this procedure to be used to gain tactical advantages (see here). The decision underlines that the court will exercise discretion when deciding whether to allow a representative action to proceed.

The court also reopened the key question of whether "passive" investors can meet the reliance requirement for a s.90A Financial Services and Markets Act 2000 (FSMA) claim based on alleged omissions or misstatements, and the requirements for a claim of dishonest delay. Last year, the High Court considered this question for the first time, ultimately dismissing claims brought by 241 funds who had not read or considered the published information alleged to contain misstatements or omissions when deciding to buy, hold or sell shares in the relevant issuer (see here). However, in a separate case this year, the High Court declined to restrict "passive" investors from bringing claims under section 90A (see here). The court preferred to defer decisions on the meaning of reliance and delay until trial, and accordingly declined to strike out the "passive" investor claims.

The courts also confirmed that shareholders generally have no entitlement to the production of a company's privileged material. The Privy Council abrogated the so-called "shareholder rule" – ie that a company cannot assert privilege against its shareholders save in relation to documents created for litigation against that shareholder – and confirmed that it forms no part of English law (see here). The Privy Council highlighted that the continued recognition of the shareholder principle would discourage directors from taking legal advice needed to make decisions for the benefit of the company, due to the risk of having to disclose that advice to shareholders later.

Finally, regulatory changes on the horizon may impact securities litigation. The FCA aims to attract and retain more listed companies in London and, as part of this drive, has published new UK prospectus rules that involve significant changes. The new rules include when companies need a prospectus for a secondary capital raising, and make it easier for companies to make forward-looking statements (see here). The new rules will come into force in January 2026. It is anticipated that the new rules will likely lead to fewer prospectuses being published, at least for secondary capital raises. While this may reduce the risk of s.90 FSMA claims, the change could magnify the importance of the information which is disclosed by issuers, driving claims under s.90A FSMA and common law claims. You can read more in our article published in Butterworths Journal of International Banking and Financial Law here.