Upheld: authorised push payment (APP) scam - investment fraud complaint against HSBC UK Bank Plc

Decision detail

Summary

Mr H invested £65,000 with company C between July and August 2024 for a rent-to-rent property investment scheme promising 22% annual returns. He never received expected returns or his capital back, and C was subsequently liquidated. HSBC initially refused to reimburse Mr H under the CRM Code, citing the need to wait for police investigation outcomes. The ombudsman upheld Mr H's complaint, finding he was the victim of an APP scam as C obtained funds through dishonest deception, with evidence showing only a small portion of the £20.2 million raised was used for legitimate property purposes while the remainder funded a Ponzi scheme. HSBC was ordered to reimburse Mr H £65,000 plus 8% simple interest from 15 days after the claim was made.

The Ombudsman's reasoning

The ombudsman determined that Mr H was the victim of an APP scam as defined by the CRM Code because the funds were transferred for what Mr H believed were legitimate purposes but were in fact fraudulent. The ombudsman rejected HSBC's argument to delay the decision pending police investigation, finding sufficient evidence already available to reach a fair determination. The ombudsman found Mr H had a reasonable basis for believing C was legitimate based on professional documentation, positive reviews, broker assurances, and Companies House registration. The ombudsman also found HSBC's written warnings were not effective as they were too broad and did not address the specific scam Mr H faced. Therefore, HSBC could not rely on exceptions to reimbursement under the CRM Code.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website