Not upheld: investment scam - failure to prevent fraud / failure to reimburse scam loss complaint against Bank of Scotland Plc (trading as Halifax)

Decision detail

Summary

Mrs O lost £10,000 to an investment scam after meeting an individual 'B' on social media who promised 5% monthly forex trading returns. She and her husband invested £30,000 total without conducting independent research, receiving documentation, or accessing the investment platform themselves. Halifax declined to reimburse the loss, and the ombudsman upheld this decision, finding Mrs O lacked reasonable basis for believing B was legitimate and that Halifax had no obligation to intervene based on the payment characteristics. The complaint was not upheld as the payment was not unusual in Mrs O's account usage and contained no identifiable fraud indicators that would have triggered a warning.

The Ombudsman's reasoning

The ombudsman applied the CRM Code framework, which allows firms not to reimburse APP scam losses where the customer made a payment without a reasonable basis for believing the payee was legitimate. Mrs O did not conduct independent research into B, received no documentation, had no access to the investment platform, gave full control of £30,000 to someone met only once, and the promised returns of 5% monthly (60% annually) were unreasonably high. Additionally, Halifax had no obligation to intervene as the payment was not unusual in Mrs O's account context and contained no identifiable fraud indicators. Recovery was impossible as the scam was reported years after the payment.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website