Thomas and another v Triodos Bank NV [2017] EWHC 314 (QB) was a decision of the Queen's Bench Division of the High Court, handed down by His Honour Judge Havelock-Allan QC on 2 March 2017. The claimants were partners in an organic farming business who moved their borrowing to the bank in 2006. In June 2008 they switched a sizeable proportion of that borrowing to fixed rates of 6.71% and 7.52% a year for 10 years. Interest rates then fell sharply from late 2008. The claimants did not say the bank should have forecast that. They said it should have explained the consequences of exiting the fixed rates early, and that it misrepresented them.
The court held that the relationship was not an advisory one and that no advice had been given. That finding matters, because what followed was not the imposition of an advisory duty. The court restated the distinction between the duty owed when advice is given about whether to buy a product and the duty owed when only information is provided, the dividing line being assessed objectively and turning on whether there is a recommendation.
The bank had nonetheless voluntarily undertaken to conform to the principles of the Business Banking Code, and had advertised that subscription in its literature and in the letters confirming the fixed rate products. In the absence of relevant disclaimers, basis clauses or contractual exclusions contradicting that position, the court was prepared to infer that the bank had assumed responsibility to the customer for adhering to those principles. The result was an intermediate duty, described in the judgment as an intermediate duty and by practitioners as a mezzanine duty: an obligation to explain the financial implications of fixing the rate, including how the early repayment charge and redemption penalty operated, in plain English. The bank was held to have breached that duty, and to be liable in misrepresentation for failing to correct the customers’ understanding of the redemption figure.
Two limits matter. First, the duty was responsive, not proactive. It was owed in answer to the customers' enquiries, because that is what the code committed the bank to, and it was not a duty to volunteer information if not asked. Second, the court was explicit that the existence of a duty of care, and its level, depend on the particular facts and on whether it is thought appropriate as a matter of policy to impose such a duty. The decision is not authority for a general duty on lenders, and does not turn every non-advised sale into an advisory relationship.
For advisers and intermediaries the transferable point is that published commitments can be read as promises. Charters, service standards, code memberships and website copy describing how a firm works can all be pleaded as the foundation of an assumed responsibility, particularly where nothing in the client documentation limits it. A firm that positions itself as non-advised, or as arranging only, needs its terms of business, engagement letters and marketing to say the same thing. Where those diverge, the marketing may be the easier target for a claimant. The point sits alongside the causation questions in the entry on Rubenstein v HSBC and the question of when conduct of business rules generate a parallel common law duty, addressed in the entry on Green and Rowley v RBS.
Compare what the firm says publicly with what its client agreement says it does, and close the gap. Keep a record of client enquiries and of the answers given, because a responsive duty is breached by an inadequate answer rather than by silence. Then check the policy: the definition of professional business needs to be wide enough to pick up information and arranging work as well as advice, because such a claim must still fall within the insuring clause. Scope of service and its effect on cover is discussed in the guide to professional indemnity insurance for IFAs, and the equivalent engagement-letter risk outside financial services in the guide for management consultants. Apex Insurance Brokers arranges cover with FCA-authorised insurers rather than underwriting it.
Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Firm reference number 724952. This entry is general information, not advice on any particular policy.