On 10 October 2022, Mr Justice Lavender handed down the High Court’s judgment in Steiner v National Westminster Bank plc [2022] EWHC 2519 (KB).

The case concerned the meaning of the word “arrangements” in section 12(b) of the Consumer Credit Act 1974 (“CCA”) and arose out of not uncommon facts where the supplier does not directly take the credit card payment.


Mr Steiner had used his NatWest credit card to pay for a timeshare agreement with Club La Costa (who was the supplier for the purposes of the CCA), however the credit card payment was not taken by Club La Costa but was taken by First National Trustee Company (“FNTC”). Ms Steiner, acting as the personal representative of her late husband’s estate, brought the claim against NatWest under sections 56, 75 and 140A of the CCA. In order to engage connected lender liability under those sections, Ms Steiner needed to establish that the credit agreement fell within section 12(b) CCA and was made “under pre-existing arrangements, or in contemplation of future arrangements” between NatWest and Club La Costa.

In Office of Fair Trading v Lloyds TSB Bank plc [2007] QB 1 the Court of Appeal held that there were the necessary arrangements between creditors and suppliers who belonged to the same credit card network, even if there were no direct arrangements between them (due to the interposition of merchant acquirers). However, in the present case, it was FNTC and not Club La Costa who was a member of the credit card network. Ms Steiner still needed to establish that there were the necessary arrangements between Club La Costa and NatWest.

At first instance, before His Honour Judge Freedman, the question was tried as a preliminary issue. The Claimant argued that arrangements existed because there were arrangements between Club La Costa and FNTC in the form of a Trust Deed and the money paid to FNTC would have been passed on to Club La Costa. NatWest conceded that the money would be passed on to FNTC but argued that distinct arrangements between FNTC and Club La Costa did not create arrangements between NatWest and Club La Costa. HHJ Freedman found for NatWest and, therefore, dismissed the Claim. Ms Steiner appealed.

The arguments on Appeal

Counsel for Ms Steiner argued that the definition of arrangements in section 12(b) CCA was broad enough to include an arrangement whereby there was a clear inference that the beneficiary of a trust would, in due course, receive the relevant transaction monies. Support was sought from the expansive  meaning given to the word “arrangements” in Asset Land Investment plc v The Financial Conduct Authority [2016] UKSC 17, the consumer protection purpose of the CCA and the High Court decision in Bank of Scotland v Alfred Truman [2005] EWHC 583 (QB) where arrangements had been found to exist when a supplier was linked to the card network through an agency relationship with the third party that took the credit card payment.

Counsel for NatWest argued:

  • Paragraph 55 of the Court of Appeal’s judgment in OFT v Lloyd’s TSB is authority for the proposition that it is appropriate to consider the position from the creditor’s perspective, as well as the consumer’s. By joining a credit card network, banks place their trust in other members of the network, but not in third parties such as Club La Costa.  In the present case, NatWest did not know of the involvement, or even existence, of Club La Costa, whereas Mr Steiner had at least the opportunity to see that he was paying FNTC rather than Club La Costa.
  • Bank of Scotland v Alfred Truman was irrelevant, because it was decided on the basis that the relationship between the supplier and the third party who took the payment was an agency relationship rather than, as in the present case, a trust relationship and those two relationships are materially different, since trustees deal as principals.
  • Alternatively, Bank of Scotland v Alfred Truman was wrongly decided, because the third party who took the payment did not join the credit card network as agent (or trustee) for supplier.

The High Court’s Decision

The High Court found for NatWest and dismissed the appeal. The heart of Mr Justice Lavender’s Judgment can be found at paragraphs 60 to 63:

    1. When a bank such as NatWest makes an agreement with a customer such as Mr Steiner in relation to a Mastercard issued by the bank to the customer, then: 
      1. The agreement is made “under” the Mastercard network, which undoubtedly constitutes “arrangements” between the bank and the other members of the network. 
      2. If a supplier is already a member of the Mastercard network, then the agreement is made “under pre-existing arrangements, … , between the [bank] and the supplier”. (It appears that this is so even if the bank is unaware of the identity of the supplier.  I note in this context that section 11(4) of the Act provides that an agreement can be a restricted-use credit agreement although the identity of the supplier is unknown (which appears to mean unknown to the creditor) at the time the agreement is made.  There was no evidence before me as to NatWest’s actual state of knowledge, but a large bank such as NatWest may or may not be aware of the identity of all of the members of a large network such as the Mastercard network at any particular time.) 
      3. The bank is well aware that other merchants are likely to join the Mastercard network in the future, so in that respect the agreement is made “in contemplation of future arrangements, between [the bank] and [a merchant who subsequently joins the Mastercard network]”. (Again, this is so even though the bank does not know when it makes its agreement with its customer the identity of future members of the Mastercard network.)
    2. I find it difficult, however, to envisage, in the absence of specific factual evidence as to the bank’s state of mind, that a bank which issues a Mastercard to its customer and makes a credit card agreement in relation that card makes that agreement under, or in contemplation of, any arrangements other than the Mastercard network. Suppose, for instance, that (as appears to have been the case) FNTC was a Mastercard merchant and that the Trust Deed was in place when NatWest made its agreement with Mr Steiner, was that agreement made under not only to the Mastercard network, but also to the Trust Deed?  It seems clear to me that the answer to that question must be “No”.  The natural and ordinary meaning of the words used in section 12(b) of the Act does not extend to saying that NatWest made its agreement with Mr Steiner under both the Mastercard network and the Trust Deed (or under both the Mastercard network and any other arrangements which parties to the Mastercard network might have with third parties). 
    3. Alternatively, suppose that FNTC became a Mastercard merchant after NatWest made its agreement with Mr Steiner. In that case, NatWest made its agreement with Mr Steiner in contemplation of arrangements (i.e. the Mastercard network) between itself and FNTC, but I do not consider that the natural and ordinary meaning of the words used in section 12(b) extends to saying that NatWest made its agreement with Mr Steiner in contemplation of the Trust Deed (or in contemplation of any other arrangements which parties to the Mastercard scheme might have with third parties). 
    4. I have carefully considered all of the arguments advanced by [Counsel for Ms Steiner]. His strongest points were perhaps that the rule of the Mastercard network did not preclude merchants using the network to collect payments on behalf of third parties (a fact which was presumably known to NatWest, so that the existence of arrangements of some kind between some merchants and third parties could therefore be said to have been in its contemplation) and that, since the purpose of the Act was to promote consumer protection, that purpose could be used as an aid to construing the Act, at least in cases of ambiguity.  For my part, however, I do not consider that the words of the section can properly be stretched so far as to mean that NatWest made its agreement with Mr Steiner under the Trust Deed (of which it was presumably unaware) as well as under the Mastercard network.

The full judgment can be read here: Steiner v NatWest [2022] EWHC 2519 (KB).


Mr Justice Lavender commented that he did not derive much assistance from Bank of Scotland v Alfred Truman (at paragraph 57) but did not specifically opine that the Truman case, which had been determined before the Court of Appeal’s decision in OFT v Lloyds, was wrongly decided. However, the Truman case must now be considered doubtful authority as it is inconsistent with Lavender J’s reasoning and, arguably, the Court of Appeal’s reasoning in OFT v Lloyds.

The decision will come as a welcome one for creditors dealing with complaints made to the Financial Ombudsman Service. In recent years, the Ombudsman service has found the necessary arrangements in a number of expanding situations (including the exact situation which was the subject of appeal in Steiner) and has often justified that position by relying on the Truman case. It will now be possible to strongly resist such an expansive approach.

Finally, the decision in Steiner could have an impact beyond the specific context in which it was determined and puts into doubt whether the necessary arrangements exist between the creditor and the supplier where the supplier is not a member of the credit card network themselves but operates as a sub-merchant through a master-merchant (who is a member of the network). Given the expanding use of sub-merchant/master-merchant structures to enable an increasing number of small suppliers to accept credit cards, there may be an emerging but important limit to the scope of connected lender liability.

Lee Finch acted for NatWest and provided this summary.