In our previous post  we reported that, in Green & Rowley v RBS, the English Court of Appeal rejected the claimant’s argument that RBS’ common law duty of care not to mis-state incorporated all its relevant duties under certain regulatory requirements, namely the Conduct of Business (“COB”) rules. The Supreme Court has now refused the Claimant’s application for permission to appeal the Court of Appeal’s judgment.

In the High Court proceedings, Green & Rowley made claims for negligent misstatement and negligent advice in respect of an interest rate swap entered into for GBP1.5million for a term of 10 years. The High Court dismissed both claims. On appeal to the Court of Appeal, Green and Rowley argued that the common law duty of the bank not to mis-state was concurrent with the bank’s duty to comply with the relevant COB rules, even in a non-advisory context. The Court of Appeal dismissed the appeal, holding that the COB rules would only inform the relevant common law duty to the extent that the transaction was conducted on an advisory basis, as opposed to an execution-only basis. The Court of Appeal decision confirmed that the English courts, like the Hong Kong courts, are unwilling to infer a common law duty into non-advisory contracts between banks and private individuals by virtue of regulatory requirements. In Hong Kong, the courts have also refused to allow private individuals to infer duties on banks by virtue of equivalent financial regulations contained in the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission (the “Code”). Such cases have been decided on the basis that the Code was not incorporated into the non-advisory contracts and to infer such duties would be contrary to the express wording contained in those contracts, namely that the relationship between the bank and the individual was execution-only. 

The Supreme Court has now rejected the claimant’s application for permission to appeal, stating that there was no arguable point of law requiring its attention. No further reasons for the refusal have been published. This decision represents another success for banks in respect of mis-selling claims and continues the trend that, in execution-only contexts, the common law duty to advise the client and warn them of the risks will not be inferred on the basis of applicable regulations.