Finance disputes arise from commercial relationships between lenders and customers or suppliers, reflecting both the diversity of such relationships and the variety of different regulated persons and products in the financial services sector.

Key decisions over the past year suggest litigation trends that will affect the sector in 2026 and beyond. In this Keynote, Financial Services partner David Farnell provides an overview of some of the key banking litigation cases in 2025.

Supreme Court reigns supreme?

Johnson v FirstRand Bank Ltd (London Branch) (t/a MotoNovo Finance) and two other cases

In 2025’s most significant decision, the Supreme Court held that a motor dealer acting as a consumer’s credit broker does not owe fiduciary duties to the consumer. However, the FCA quickly announced plans for a consumer redress scheme, disregarding the Supreme Court’s finding that Consumer Credit Act 1974 unfair relationship claims should be judged on their specific facts. While some saw the decision as damaging for the claims management industry, CMCs and investors remain active, especially in secret commission claims in insurance and energy markets. Whether similar claims emerge elsewhere in the financial services sector remains to be seen.

Mis-sold mis-selling claims

Vanquis Bank Ltd v TMS Legal Ltd

One common claims industry theme is the mis-selling of financial products. Here, the bank contended that the solicitors representing the borrowers in a series of claims had committed unlawful means conspiracy, breaching contractual and regulatory duties owed to their clients.

The High Court dismissed the solicitor firm’s strike-out application. The outcome at trial may influence how other financial services providers respond to multiple claims.

Russia sanctions impact on the financial services sector

Celestial Aviation Services Ltd v UniCredit Bank GmbH, London Branch

Attempts to recover monies due from transactions affected by the Russia (Sanctions) (EU Exit) Regulations 2019 have featured in several cases. The Supreme Court will decide later this year whether a bank was right to treat payments demanded on letters of credit, relating to the supply of aircraft, as subject to UK sanctions.

Although finding the sanctions did not bite, the Court of Appeal decided the bank had a defence under section 44 of the Sanctions and Anti-Money Laundering Act 2018, because it had reasonably believed its conduct had been compliant with UK sanctions.

The Court of Appeal opined that the Regulations are a blunt instrument, and firms should not be subjected to an unduly high test to determine whether they held a reasonable belief at the relevant time, particularly where they needed to make complex decisions in a fast-moving, high-risk legislative landscape.

Back in the Arena

Arena Television Ltd (in liquidation) and another v Bank of Scotland plc and another

In the latest episode of this notorious fraud case, the High Court refused the bank’s applications to strike out claims brought by Arena and its supplier, Sentinel, for alleged breaches of the Quincecare duty.

In the leading case of Philipp v Barclays Bank UK plc, the Supreme Court decided that the duty only applies where the customer’s agent provides payment instructions, and the bank is on inquiry that there are reasonable grounds to believe the instructions are an attempt to misappropriate funds.

At the trial of the current case, the High Court must determine the key issue: in relation to each company, did the director lack authority as its agent to instruct the bank to pay?

The Court made clear, when dismissing the bank’s strike-out applications, that the Quincecare duty’s scope does not extend to protecting the bank’s customer against APPs, even if the bank would not have made the payment, in circumstances where it had frozen the relevant account pending the completion of inquiries about the suspicious payment.

Quincecare duty extended to payment services providers

Hamblin and another v Moorwand Ltd and another (subject to appeal)

 The High Court extended the Quincecare duty to a PSP that the Court found had been on inquiry when receiving a fraudster’s instruction to open an electronic payments wallet – the fraudster having impersonated the customer’s authorised agent. The Court said that the PSP should have monitored the subsequent transactions more closely and that, as a matter of fact, no one but the actual authorised agent could have instructed the PSP validly to make payments out. Consequently, the PSP was held liable to restore the customer’s money paid out upon the fraudster’s instructions. The Court avoided the issue of whether authorisation had been given for each transaction in accordance with the Payment Services Regulations 2009 and the contract.

A receiving bank has no retrieval duty

  • Santander UK plc v CCP Graduate School Ltd

The High Court struck out a claim that the receiving bank owed a duty to retrieve funds lost to APP fraud, because the claimant third party had no contractual relationship with the bank.

  • Barclay-Ross v Starling Bank Ltd

The bank followed its customer’s payment instructions but later failed to take reasonable steps to recover funds when the customer reported fraud. The High Court struck out parts of the customer’s claim (erroneous allegations that the bank had breached the CRM Code, or been negligent) but considered it arguable that the bank had owed a retrieval duty and permitted her to amend her claim. She instead discontinued the claim.

If you have questions or concerns about banking litigation or financial disputes, please contact David Farnell.