Santander UK has successfully defended a lawsuit challenging its responsibilities in a complex push payment fraud case, with the high court dismissing claims that banks must proactively retrieve stolen funds.

The case, brought by CCP Graduate School, centred on a fraudulent transaction involving £415,000 ($537,000) transferred from a Natwest account to a Santander account controlled by scammers.

The teacher training provider argued that Santander should have a legal obligation to attempt recovery of funds lost through an authorised push payment (APP) fraud. However, judge Jennifer Eady decisively rejected this argument, ruling that banks do not have a "freestanding duty" to intervene in third-party financial transactions.

UK Finance reported more than 232,000 APP fraud cases in 2023, highlighting the growing challenge of financial scams. New compensation regulations implemented in October 2024 aim to provide additional protections for victims.

The high court's judgment highlighted the potential operational challenges such a duty would impose. Judge Eady noted that requiring banks to investigate and halt every suspected fraudulent transfer would create "an unacceptable burden" given the millions of monthly transactions.

"If CCP Graduate School was correct, banks would have to respond to APP fraud allegations by contacting multiple banks and seeking immediate fund recalls," the judge explained.

The ruling follows a similar 2023 Supreme Court case against Barclays, which largely dismissed claims about banks' responsibilities in fraud scenarios while leaving some nuanced legal questions open.

The decision represents a significant moment for the banking sector, potentially setting a precedent for how financial institutions manage fraud claims and their legal obligations to customers and third parties.

CCP Graduate School's lawsuit against Natwest was previously dismissed last year, and this latest judgment against Santander UK further reinforces banks' current operational frameworks.

The case underscores the complex challenges faced by financial institutions in protecting customers from increasingly sophisticated fraud mechanisms while maintaining practical operational standards.

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