Partially upheld: scam reimbursement and fraud prevention complaint against Lloyds Bank PLC

Decision detail

Summary

Mrs C complained that Lloyds Bank PLC declined to fully reimburse her after she fell victim to a scam involving a fake vintage piano investment. Lloyds reimbursed £15,050 under the CRM Code but refused further reimbursement, citing an exception for payments made without reasonable basis for belief in legitimacy. The ombudsman partially upheld the complaint, finding that while Lloyds correctly applied the CRM Code exception (Mrs C lacked reasonable basis for belief given the suspicious circumstances and lack of documentation), Lloyds failed in its wider fraud prevention obligations by not conducting sufficiently probing questioning when Mrs C disclosed prior scam victimhood and not questioning the remote access software on her device. The ombudsman apportioned liability equally and ordered Lloyds to pay 8% simple interest on the reimbursed amount from date of loss to settlement.

The Ombudsman's reasoning

The ombudsman found that while Mrs C fell victim to a sophisticated scam, she did not meet the high threshold for vulnerability under the CRM Code. The ombudsman upheld Lloyds' application of the 'no reasonable basis for belief' exception because Mrs C: proceeded with a high-value investment from the same individuals involved in a concerning earlier scam; failed to obtain supporting documentation; did not conduct adequate independent research; was instructed to mislead her bank; and had remote access software installed. However, the ombudsman found Lloyds failed in its wider fraud prevention obligations by not conducting more probing questioning when Mrs C disclosed prior scam victimhood, not questioning the remote access software, and not requesting documentation before the initial payment. The ombudsman therefore apportioned liability equally (50/50) between the parties.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website