The Electronic Presentment of Instruments (Evidence of Payment and Compensation for Loss) Regulations 2018

Responsible banker to compensate eligible claimants

5.—(1) Subject to the following provisions of this Part, a responsible banker(1) must compensate a person (“the claimant”) for loss incurred by the claimant if—

(a) the claimant incurred the loss in connection with electronic presentment or purported electronic presentment of an instrument(2),

(b) the claimant is—

(i) the customer of the banker which has paid the instrument, from whose account the payment was debited, or

(ii) the banker which paid the instrument,

(c) the loss resulted wholly or in part from a factor other than—

(i) gross negligence(3) on the part of the claimant, or

(ii) fraudulent activity in which the claimant was knowingly involved,

(d) the claimant has notified a banker in accordance with regulation 6(1) and made a claim in accordance with regulation 6(3) and (4), and

(e) one of the criteria in paragraph (2) is met.

(2) The criteria are—

(a) the electronic presentment or purported electronic presentment of the instrument was of a type described in section 89E(2)(c), (d) or (e) of the Bills of Exchange Act 1882;

(b) the instrument was collected for or paid to a person other than the true owner of the instrument.

(3) Paragraph (1) applies irrespective of fault for the loss incurred by the claimant (but regulation 8 makes provision for the reduction in the amount of compensation to be paid in certain circumstances).

(4) In this regulation, references to “loss” are to loss arising directly from the debiting of funds from the claimant’s account and do not include any further loss arising in consequence thereof.

(1)

Section 89E(3) of the Bills of Exchange Act 1882 makes provision about the meaning of “responsible banker”.

(2)

Section 89E(2) of the Bills of Exchange Act 1882 makes provision about the meaning of “electronic presentment or purported electronic presentment of an instrument”.

(3)

The phrase “gross negligence” is also used in regulations 75 and 77 of the Payment Services Regulations 2017 (S.I. 2017/752). The Payment Services Regulations 2017 transposed in part Directive 2015/2366/EU of the European Parliament and of the Council of 25th November 2015 on payment services in the internal market, amending Directives 2002/65/EC, 2009/110/EC and 2013/36/EU and Regulation (EU) No. 1093/2010, and repealing Directive 2007/64/EC (OJ L 337 23.12.2015, p.35).