Gross negligence in bank payments law

Jo Braithwaite

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: The law’s allocation of responsibility for disputed bank payments is important not only for banks and customers, but also, given the volume and value of payments, for the economy more broadly. This article examines loss allocation under common law, EU–UK regulation and the UK’s ‘world-first’ scheme for ‘authorised push payment’ frauds, showing that the gross negligence standard of customer conduct is a common feature. Indeed, this ‘slippery concept’ sits at critical junctures, providing, in practice, the most relevant limitation to a bank’s liability to refund payments. The article analyses what this standard means in English common law and in its regulatory contexts, and highlights the important connection between the two. It then draws upon decisions by the UK’s Financial Ombudsman Service, amongst other sources, to explore how evaluating bank customer conduct works in practice, concluding that it is time for regulators to rethink the status quo.

Keywords: banks; payment; gross negligence; payment services; fraud; Financial Ombudsman Service (search for similar items in EconPapers)
JEL-codes: G21 G28 K23 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2026-02-02
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Published in Oxford Journal of Legal Studies, 2, February, 2026. ISSN: 0143-6503

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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:130757

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