Partially upheld: Fraud reimbursement (APP scams) complaint against Cater Allen Limited
Financial Ombudsman decision DRN-5957496 of 2025-11-18T00:00:00+00:00. Fraud reimbursement (APP scams) complaint against Cater Allen Limited. Outcome: Partially upheld.
Decision detail
| Reference | DRN-5957496 |
|---|---|
| Decision date | 2025-11-18T00:00:00+00:00 |
| Firm | Cater Allen Limited |
| Product | Current account |
| Claim type | Fraud reimbursement (APP scams) |
| Outcome | Partially upheld |
| Remedy | Cater Allen Limited must pay Mr C £16,892.17 (his losses from all five disputed transactions less 50% of losses from payments three to five, and less £6,922.26 already returned). Additionally, 8% simple interest per year must be paid on this amount from the date of each disputed transaction to the date of settlement, less any tax lawfully deductible. |
Summary
Mr C made five international payments totalling £23,814.07 to a company as part of an advance fee scam involving the purported sale of shares. He was asked to pay a 'vendor bond' and subsequently taxes before receiving settlement, which never materialised. Cater Allen intervened only on the first payment, asking closed questions that failed to uncover the scam's true nature. The ombudsman found that Cater Allen breached its duty to conduct proportionate fraud prevention by not asking open and probing questions, and that a proper intervention would likely have prevented the payments. However, Mr C bore 50% contributory negligence from payment three onwards when he should have questioned why taxes were required in advance. The ombudsman ordered Cater Allen to refund £16,892.17 (less amounts already returned) plus 8% simple interest.
The Ombudsman's reasoning
Cater Allen had a duty under the Payment Services Regulations (2017) and good industry practice to have account monitoring systems to identify customers at risk of fraud. Although the CRM code does not apply to international payments, the ombudsman's role is to determine what is fair and reasonable in the circumstances. Cater Allen's intervention on the first payment was inadequate because the agent asked closed questions rather than open and probing questions, failing to uncover the full circumstances of the payment. Had Cater Allen asked properly, it would have discovered the advance fee scam nature of the transaction and should have warned Mr C. The ombudsman found it likely that a proper warning would have prevented the first payment. However, Mr C bore contributory negligence from payment three onwards, when he should have questioned why he was being asked to pay taxes in advance for a transaction he had not previously encountered, particularly when the advance payments would represent nearly half the expected settlement.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| Cater Allen Limited, all decisions | 45 | 20% |
| Fraud reimbursement (APP scams), all decisions | 19,453 | 22% |
| Current account, all decisions | 48,245 | 19% |
Source
Read the original decision on the Financial Ombudsman Service website