Finch v Lloyds TSB Bank plc  EWHC 1236 (QB)
In a first-of-its-kind case, the Mercantile Court in Manchester has dismissed a claim that Lloyds Bank owed any kind of advisory duty to its customer for the sale of a fixed-rate loan. The Court found that a positive duty of care in tort would only arise in “exceptional circumstances”, markedly different from the conventional banker-customer relationship. HHJ Pelling QC heard argument on the nature of a break clause within a fixed-rate loan (described by the claimants as an “embedded swap”), and whether a bank owed a duty to warn customers about the presence of such a clause. The Court rejected a gamut of claims in tort, contract and misrepresentation, finding that Lloyds Bank owed no such duty, and that the presence of a break clause would not of itself make a fixed-rate loan unsuitable for a customer.
Ian Wilson (instructed by TLT LLP) acted as sole Counsel for the successful Bank.
The judgment is available here.