Not upheld: Card / payment disputes complaint against Starling Bank Limited

Decision detail

Summary

The director of S complained that Starling Bank Limited unreasonably returned a large CHAPS payment of approximately £1m on 29 August 2025, causing over £200,000 in losses when the payment was successfully resubmitted on 3 September 2025. The payment involved proceeds from a property sale by a holding company (which S owned) being paid into S's account, as the holding company's own account application had been declined. The ombudsman did not uphold the complaint, finding that Starling reasonably declined the initial payment due to its unusual nature and regulatory obligations to conduct thorough checks on large transactions, and that the processing timeframe for the second payment was reasonable given its late arrival and the need for comprehensive review.

The Ombudsman's reasoning

The ombudsman found that Starling acted reasonably in returning the initial payment because: (1) the transaction was highly unusual - involving proceeds of a property sale being paid back into the purchaser's account rather than the seller's; (2) the director had disclosed information about the beneficial owner being the holding company; (3) Starling was obliged to conduct thorough checks on such a large CHAPS payment due to regulatory requirements to prevent fraud and financial crime; and (4) the circumstances gave Starling reasonable grounds to decline the payment. Regarding the second payment, the ombudsman found the processing timeframe reasonable given the late arrival time (16:02), the requirement for comprehensive review and management sign-off, and the size and nature of the transaction. The ombudsman acknowledged the director's distress and financial impact but concluded Starling took a reasonable and careful approach given the regulatory obligations and unusual circumstances.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website