Green and Rowley: Court of Appeal judgment handed down - .PDF file.
The keenly awaited Court of Appeal judgment in the mis-selling interest swap case brought by Paul Rowley and John Green against RBS has just been released. Taylor Wessing reported in an earlier e-alert that the Court of Appeal held that the bank owed Green and Rowley no common law duty of care on which to base a claim for damages. The written judgment, setting out their Lordships’ reasoning, confirms that where, as here, a bank does not assume an advisory relationship with its customer, but simply provides it with information as to the suitability of the swap in question, it will not be required to demonstrate compliance with its statutory obligations in order to avoid a mirror claim at common law.
By way of recap, Messrs Green and Rowley brought proceedings claiming that they were mis-sold an interest-rate swap as the bank had failed to inform them of potential break costs related to the swap. A claim for breach of statutory duty of the then relevant Conduct of Business Rules (COB Rules) was time barred, so they sought to argue that a duty, imposing the same requirements as under the statutory regime, also existed at common law to take advantage of the ‘more generous’ limitation period available under the common law. They asserted that the relevant duty included those under COB Rule 2.1.3 to take reasonable steps to communicate fairly or clearly and Rule 5.4.3 to take reasonable steps to ensure that the customer understands the nature of the risks involved. The Court of Appeal disagreed, making it clear that the ‘mere existence’ of a statutory duty, such as the requirement to comply with the COB Rules as in this case, does not give rise to a co-extensive duty of care, which effectively imposes the same requirements as the statutory duty, at common law…
If you are registered and logged in to the site, click on the link below to read the rest of the Taylor Wessing briefing. If not, please register or sign in with your details below.