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Blog Archives
Unveiling APP Fraud: Exploring the Barclays Quincecare Case
Head of Dispute Resolution Robin Henry and Associate Jean-Martin Louw discuss the most prevalent class of fraud being perpetrated in the UK, authorised push payment (“APP”) fraud, and the options available for its victims. Topics covered include: What is the …
Posted in Podcasts
Tagged de-banking, debanking
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The FCA: a changing approach to non-financial misconduct
Head of Dispute Resolution Robin Henry and Associate Tamara Davis discuss non-financial misconduct with a particular focus on how the FCA are developing their regulatory scope in this area. Topics covered include: What is financial misconduct and how is it …
Posted in Podcasts
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Unbanked: Exploring the Impact of De-Banking
Head of Dispute Resolution Robin Henry and Associate Jean-Martin Louw discuss the topical subject of de-banking. Topics covered include: What is debanking? What effect can this have on bank customers? What can you do if a bank decides to close …
Posted in Podcasts
Tagged de-banking, debanking
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Introducing the new FCA Consumer Duty
From 31 July 2023, the new Consumer Duty applies to all new and existing regulated financial products or services that are open to sale and renewal. This will extend to closed products or services from 31 July 2024. Head of …
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Frozen or terminated bank accounts: What can you do?
As the digital economy continues to expand and ongoing developments in fin-tech send money flying around the world with unprecedent speed and ease, financial institutions are struggling to balance compliance responsibilities with their customer care obligations. Unfortunately, ordinary customers often …
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Tagged frozen bank account, terminated bank accounta
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Collyer Bristow continues growth with Commercial Litigation Partner hire
Collyer Bristow has appointed David Vaughan as a Partner in the Dispute Resolution department. David joins the firm from Shakespeare Martineau, where he was also Head of the London Office. His appointment at Collyer Bristow is effective as of 3 …
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A new direction for FCA decision making
As part of the Financial Conduct Authority’s (“FCA”) “Transformation Programme” to become a more innovative and assertive regulator, the FCA has announced its new approach to decision making. The policy statement (PS21/16) amends the FCA’s Enforcement Guide (EG) and Decisions …
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Tagged FCA, regulator, Transfer of power, Transformation programme
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Interim injunction against Bitcoin discharged and damages considered an adequate remedy
In a recent High Court decision, Toma v Murray, Robin Vos sitting as Deputy High Court Judge, declined to a continue a without-notice interim injunction which restrained the Defendant from dealing with Bitcoin held in a coin deposit account. Vos held that damages would be an adequate remedy in this instance.The Claimants sold Bitcoin through an account on the Finnish platform LocalBitcoins.com. However, the payment they received was reversed, leaving the Claimants without the Bitcoin or their payment. The Defendant controlled the LocalBitcoins.com accounts used to make and withdraw the payments, and which continued to hold the Bitcoin. The Defendant did not go as far as to admit that there was a fraud, though he allowed the Court to proceed on the basis that a fraud had taken place, and asserted that the account had been hacked.The Claimants initially obtained a without notice interim injunction. LocalBitcoins also froze the account, though they said that in absence of a court order they would release the Bitcoins to the Defendant.On reviewing the injunction and deciding whether it should be upheld, Vos decided that although the Claimants’ made a proprietary tracing claim, they were ultimately seeking the value of the Bitcoin held in the deposit account and therefore the claim could be satisfied in monetary terms.He held that the injunction should not be upheld and the case is set to continue to determine whether or not there was any fraud on the part of the Defendant, a matter which could not be dealt with at an interim hearing. This is an interesting decision as it considers Bitcoin in relation to its value in monetary terms over its proprietary value. The Court distinguished it from AA v Persons Unknown [2019], the precedent for Bitcoin interim claims, as the Defendant was identified and had shown he held a significant unencumbered asset and there was no reason to believe he would not be able to meet any award against him. This was balanced against the fact that the Claimants admitted that they would have difficult in satisfying across undertaking of damages. On balance the Court considered that this decision left the Claimants with a remedy and did not place an disproportionate risk of loss on the Defendant.Some consideration was given to the volatility of the price of Bitcoin and the impact this may have on both parties. Though the Court focused on the fact that a price and value was given to the Bitcoin at the time of sale and the claim therefore was considered to be for the price paid. A condition was included in the Order to allow the Defendant to sell the Bitcoin only with the consent of the Claimant as a means of neutralising this risk. It shows once again that the court’s are having to approach digital asset cases innovatively. It will be interesting to see if any concession is given to the change in value of Bitcoin in the time before final judgment.Toma and another v Murray [2020] EWHC 2295 (Ch) (29 July 2020) (Robin Vos, sitting as Deputy High Court Judge).
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Is it a Fair CoP?
Confirmation of Payee (CoP) checks were introduced on 30 June 2020. The system is a new way for banks to check the account details of a payee (that is the recipient – whether a person or a business – of a bank transfer) before the payment is sent. This helps to avoid a payment being sent to the wrong account, whether as a result of a mistake or a fraud.The CoP mechanism was originally due to be introduced in late March 2020, but it was postponed due to COVID-19. The six principal banking groups in the UK were all required to implement the new protection by this date, though some smaller banks and building societies may also choose to introduce it.Previously when processing a payment mandate, only the payee account number and sort code were checked. This left an opening for fraudsters to substitute their own bank account details for those of the intended recipient of the funds as nobody would check whether the payee’s name matched the name on the account to which the funds were to be transferred. However, from 30 June 2020, when a customer sets up a new payee or changes the payee details on an existing payment mandate, a CoP check will be run to confirm whether the payee’s name is in fact the same as that of the accountholder.There are three possible responses from a CoP check. First, the payee bank may confirm an exact match between the payee name and the name of the accountholder in which case the payment will be processed as planned. Alternatively, there may be a partial match. The customer making the payment will then be shown the name of the accountholder in order to verify whether this is in fact the correct payee. Lastly, there may be no match, in which case the customer is asked to check the payee name and account details before proceeding with the payment.The new system is intended to reduce the risk of authorised push payment (APP) fraud, as well as innocent mistakes made by customers. APP fraud happens when fraudsters deceive individuals (either consumers or employees of a business) into making a payment to the fraudster’s bank account. An example of this would be sending an invoice that looks very similar to one which the individual is expecting, such as an invoice from a supplier, but which includes the fraudster’s own account details. The individual arranges payment of the invoice but has unknowingly paid the fraudster instead of the legitimate recipient.While it is expected that the CoP checks will reduce instances of fraud, there are limitations to the new system. CoP checks can only be carried out where both the paying and payee banks have implemented the mechanism and, at least for the time being, only where the payments are being made by the Faster Payments System or by CHAPS. CoP checks also cannot be carried out for international payments. Fraudsters are likely, therefore, to adapt their approach, for example, by opening accounts with banks which do not have the CoP mechanism in place.The existence of the partial match response may also lead to fraudsters opening accounts using names which are very similar to the names given on the fake invoices in the hope that the bank customer won’t notice the slight discrepancies or that they will assume it’s a mistake on the invoice. Bank customers should be check partial match responses very carefully to avoid this risk, and if necessary, contact the payee to confirm the account details. Where contacting the payee, make sure to use a different contact method than the one used to send the invoice, for example, by calling a supplier instead of replying to the email attaching the invoice.Businesses should also take appropriate steps to limit the risk of customers not getting an exact match on a CoP check when paying an invoice, for example, by ensuring that the payee name listed on their invoices is an exact match for the name on the bank account.
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The BoE encourages market participants to move from LIBOR to risk-free rates with new policies for the treatment of LIBOR-linked collateral
The Bank of England (BoE) provides liquidity to market participants and lends to firms against a wide set of eligible collateral. To encourage market participants to move away from LIBOR, the BoE has announced new policies for the treatment of LIBOR-linked collateral in the BoE’s Sterling Monetary Framework lending operations. Specifically:From 1 April 2021, the BoE will apply increasing haircuts on all LIBOR-linked collateral maturing after 31 December 2021. This means that the value of the LIBOR-linked collateral against which the BoE is lending will be reduced by an increasing percentage until the end of 2021. Haircuts are scheduled to reach 100% by 31 December 2021.From 1 April 2021, any LIBOR-linked collateral issued on or after that date and maturing after 31 December 2021 will be ineligible for use in the Sterling Monetary Framework.These milestones for LIBOR-linked collateral have recently been revised to account for the temporary disruption caused by the Covid-19 pandemic and resulting changes to the interim milestones announced by the Working Group on Sterling Risk Free Rate Transition (the Working Group) on 29 April 2020. In particular, the Working Group has announced that all new issuance of sterling LIBOR-referencing loan products that expire after the end of 2021 should cease by the end of Q1 2021 (previously end of Q3 2020).Although the impact of the Covid-19 pandemic has delayed certain milestones, the date from which the BoE intends to apply a 100% haircut on LIBOR-linked collateral (i.e. implying effective ineligibility) remains 31 December 2021. This shows that the central assumption remains that firms cannot rely on LIBOR being published after the end of 2021.
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