Not upheld: alleged scam / rogue trader / failure to prevent loss complaint against Lloyds Bank Plc

Decision detail

Summary

Mrs P paid £12,056.25 to construction firm O for kitchen installation work between April and July 2024 through her Lloyds current account. O completed work to poor standard and subsequently ceased work, leaving Mrs P with significant losses. Mrs P believed O was operating a scam and complained to Lloyds, which declined to reimburse her under the CRM Code as a civil dispute. The ombudsman upheld Lloyds' decision, finding insufficient evidence that O intended fraud from the outset, as it had legitimate business registration, prior trading history, completed work, and no prior fraud reports. The loss resulted from defective services rather than fraudulent intent, placing it outside CRM Code protection.

The Ombudsman's reasoning

The ombudsman concluded this was a civil dispute regarding defective services rather than a scam. Although O performed work poorly and may have been insolvent, the evidence showed O did carry out work, had legitimate business registration, prior trading history, positive reviews, and no prior fraud reports. The poor quality and non-completion of work does not constitute fraudulent intent under the CRM Code definition, which requires the recipient to have had no intention of carrying out any work. Lloyds' intervention with fraud warnings was proportionate and it had no obligation to conduct detailed solvency analysis of the contractor.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website