Not upheld: scam loss liability / fraud prevention duty complaint against Clearbank Limited

Decision detail

Summary

Mr G, director of S, invested £13,500 in a property investment scam operated by company C, making payments from a Clearbank business account. Clearbank acknowledged it should have questioned the unusually large £13,400 payment but did not intervene. Mr G complained that Clearbank was liable for the loss. The ombudsman found that while Clearbank breached its monitoring duty, it was not liable because Mr G would have proceeded regardless of any warning. Mr G had been introduced by a seemingly legitimate property company, conducted his own research, and found no concerning information about C, which was registered at Companies House and disclosed its lack of FCA regulation upfront.

The Ombudsman's reasoning

While Clearbank admitted it should have intervened on the payment, liability requires both a breach of duty and causation. The ombudsman found that even if Clearbank had warned Mr G about investment scam risks, he would likely have proceeded because: (1) he had been introduced by a seemingly legitimate property company that assured him it had conducted due diligence; (2) he had conducted his own research and found no red flags; (3) C was registered at Companies House with professional documentation; (4) C disclosed it was not FCA regulated in its promotional material; (5) C's promotional material identified an FCA-regulated fund manager; and (6) no public information available at the time would have revealed C as a scam. Therefore, the ombudsman was not persuaded that Clearbank's intervention would have changed Mr G's decision-making.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website