Not upheld: scam/fraud - refund claim under CRM Code complaint against Barclays Bank UK PLC

Decision detail

Summary

Mr and Mrs G invested £20,000 in a mini-bond offered by Company M in June 2019, which subsequently failed and was wound up by High Court order in August 2021. The Insolvency Service found Company M's marketing material was misleading regarding security levels. When Mr and Mrs G reported the matter to Barclays as a scam in February 2024, Barclays declined to refund, characterising it as a civil dispute outside the scope of the CRM Code. The ombudsman upheld Barclays' position, finding insufficient evidence that Company M intended to defraud investors from the outset, despite the misleading marketing and ultimate failure of the investment.

The Ombudsman's reasoning

The ombudsman applied the CRM Code definition of an APP scam, which requires both a misalignment between the customer's purpose and the firm's purpose for the payment, and dishonest deception by the firm. The ombudsman found that while Company M's marketing material was misleading regarding security levels, there was insufficient evidence to establish that Company M never intended to develop property with investors' funds or that the directors intended to dishonestly deceive from the outset. The evidence showed Company M was operating legitimately with registered charges, completed projects, and transparent communication about financial difficulties. The threshold for fraud is high (more likely than not), and the ombudsman concluded this threshold was not met.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website