Manchester Building Society v Grant Thornton LLP [2021] UKSC 20 is the leading modern authority on scope of duty in professional negligence. Decided by the Supreme Court alongside Khan v Meadows (the companion appeal on the medical-negligence side), it recast the SAAMCO principle and replaced the long-standing information-versus-advice dichotomy with a structured six-question framework. For professionals carrying PI cover, and the brokers who arrange that cover, the decision changed how courts now decide whether a particular loss falls within the duty a professional owed.
Manchester Building Society had used long-dated interest-rate swaps to hedge its book of lifetime mortgages. Grant Thornton, the society's auditor, advised that hedge accounting under the relevant accounting standard was appropriate. The society relied on that advice for several years. When the error was discovered, the swaps had to be unwound. Breaking them out at the prevailing market rates produced a substantial loss, which the society sought to recover from Grant Thornton.
At first instance and in the Court of Appeal, the claim came up against the SAAMCO cap. Applying South Australia Asset Management Corp v York Montague Ltd [1997] AC 191, the Court of Appeal characterised Grant Thornton's role as providing information rather than advice, and held that the swap-breakage loss was not within the scope of the auditor's duty. The market movement, on that view, was the society's own commercial risk, not something the auditor had taken responsibility for.
The leading judgments of Lord Hodge and Lord Sales accepted that SAAMCO had become difficult to apply consistently. The information-versus-advice label, in particular, had hardened into a near-mechanical test that often obscured the underlying question: what was the professional actually being paid to protect the client against? The Court restated the analysis as a structured sequence of six questions:
Applying that framework, the majority held that Grant Thornton's duty included protecting the society against the very risk that materialised. The society had engaged the auditor specifically to advise on whether hedge accounting was available; the swap-breakage loss was the direct consequence of acting on incorrect advice on that point. The claim therefore fell within scope and was recoverable, subject to the usual contributory-negligence and remoteness checks.
The practical effect is that courts and litigators no longer pivot the whole analysis on whether the professional provided information or advice. That label can still be useful shorthand, but the structured six-question test is now the substantive route through a scope-of-duty argument. Claimants can show, by reference to the retainer and the surrounding circumstances, that a particular risk fell inside the duty. Defendants can resist by showing that the loss claimed is the fruition of a different risk that the professional never took responsibility for.
The decision sharpens the focus on what the engagement letter actually asks the firm to do. Where an auditor is engaged specifically to opine on a treatment that drives a commercial decision, losses flowing from reliance on that opinion are more likely to be within scope. Apex covers this in more depth on the accountants PI insurance guide.
The same structured approach applies across the regulated professions. A solicitor advising on the legal effect of a clause, an IFA advising on the suitability of a structured product, or a surveyor valuing for lending purposes, will all be assessed by reference to the six questions. The retainer, the regulatory framework and the surrounding facts decide what risks were within scope. Apex's wider sector pages — including the solicitors PI guide, the IFA PI guide and the surveyors PI guide — set this in context.
For the older authority that this case modernises, see SAAMCO principle: scope of duty. For the intervening Supreme Court treatment that confirmed the information-versus-advice distinction before it was recast, see Hughes-Holland v BPE Solicitors.
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