Journal of International Banking & Financial Law/2010 Volume 25/Issue 3, March/Articles/Bank Duty of Care
- (2010) 3 JIBFL 206
Journal of International Banking and Financial Law
(2010) 3 JIBFL 206
1 March 2010
Bank Duty of Care
Titan Steel Wheels Ltd v Royal Bank of Scotland Plc [2010] EWHC 211 (Comm) (Queen's Bench Division, Commercial Court) (David Steel J) (11 February 2010)
Jonathan Lawrence
K&L Gates LLP
jonathan.lawrence@klgates.com
www.klgates.com
© Reed Elsevier (UK) Ltd 2010
FACTS
Titan Steel Wheels Ltd ('Titan') is a manufacturer of steel wheels. Titan's income was predominantly in euros
whereas much of its expenditure was in sterling. Royal Bank of Scotland plc (the 'Bank') provided Titan with
two currency swap products to cover any shortfall in available income to meet its expenditure. The judgment
concerned three preliminary issues.
CONCLUSION
Titan was not a 'private person' as defined by the Financial Services and Markets 2000 ('FSMA') (Rights of
Action) Regulations 2001. Therefore Titan did not have a right of action for damages under FSMA. Currency
trading was an integral, rather than incidental, part of Titan's business. Titan had a general need to manage
its foreign currency risk and the motive for entering the products at issue was for Titan to make a profit. They
were not 'vanilla hedges'. Titan therefore suffered the loss in question 'in the course of carrying on business
of any kind' and was not entitled to a remedy under FSMA.
The Bank did not act in the capacity of an adviser to Titan and the Bank did not owe a common law duty of
care in respect of advice in relation to the products. The Bank had made clear in its written terms of business
(the 'Terms') that it was only providing an execution service to Titan, Titan was to seek independent advice if
required and Titan was to place no reliance on the Bank for advice or recommendations of any sort. Titan
could not claim that the products at issue were more complex or of a different nature than those it had entered into previously. The Terms created contractual estoppel. They made it clear that the Bank was not
obliged to give advice but the Bank was protected if it did in fact advise Titan. A person who signed a document knowing it was intended to have a legal effect was generally bound by its terms. The Bank officer was
acting as a saleswoman, not an adviser, to Titan.
The Terms fell outside the Unfair Contract Terms Act 1977. The Terms were a contract between commercial
parties of equal bargaining strength, they were standard to many banks and there was no difficulty in Titan
seeking advice independently.