Upheld: fraud reimbursement under CRM Code complaint against Bank of Scotland plc, trading as Halifax

Decision detail

Summary

Mr H invested £310,000 in Company G between April 2022 and January 2024, introduced by a longstanding friend who was a director. When Company G entered administration in 2024, Mr H discovered it was operating a fraudulent investment scheme that had raised £25.3m for a £4.4m contract, displayed Ponzi scheme characteristics, and involved fabricated insurance claims. Halifax rejected his reimbursement claim under the CRM Code, arguing it was a private civil dispute. The ombudsman upheld the complaint, finding Mr H was the victim of an APP scam within the CRM Code's scope, and ordered Halifax to reimburse the full £310,000 plus 8% interest.

The Ombudsman's reasoning

The ombudsman found that Mr H's circumstances meet the definition of an APP scam under the CRM Code, specifically that he transferred funds to another person for what he believed were legitimate purposes but which were in fact fraudulent. The evidence demonstrated Company G was operating a fraudulent investment scheme with Ponzi scheme characteristics, misappropriation of funds, and fabricated insurance claims. Mr H had a reasonable basis for believing the investment was legitimate given his long-standing relationship with the director, his due diligence checks, and in-person meetings. No valid exceptions to reimbursement under the CRM Code applied, as Mr H did not ignore effective warnings and held a reasonable basis for his belief in the investment's legitimacy.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website