Not upheld: Fraud reimbursement (APP scams) complaint against National Westminster Bank Public Limited Company (NatWest)

Decision detail

Summary

Mr Z paid a builder £44,300 in six transfers between February and March 2025 for £50,000 worth of home improvements. The builder commenced work but abandoned the project around March 2025, citing cash flow and staffing issues, leaving approximately 30% of work incomplete. Mr Z claimed this was an APP scam and requested reimbursement from NatWest, which declined on the basis it was a civil dispute. The ombudsman upheld NatWest's decision, finding that while the builder breached the contract, the evidence did not support that he intended to defraud Mr Z at the time of payment. The builder had completed substantial work, maintained professional communication, and his account showed legitimate business activity, distinguishing this from a typical APP scam.

The Ombudsman's reasoning

The ombudsman applied the Faster Payments Scheme and CHAPS Reimbursement Rules definition of an APP scam, which requires proof that the recipient deliberately deceived the consumer into transferring funds with no intention of providing the agreed services. The evidence showed: (1) Mr Z paid the intended recipient (the builder's business account); (2) the payment purpose matched both parties' intentions (home renovation work); (3) the builder commenced work and completed approximately 70% of it; (4) the builder's account showed typical legitimate business usage; (5) the builder provided legitimate documentation; (6) communication remained professional; and (7) the builder did not attempt further extraction of funds. While the builder failed to complete the work, this constitutes a breach of contract (civil dispute) rather than evidence of fraudulent intent at the time of payment. The ombudsman noted that businesses can fail to complete work for genuine reasons such as poor financial management, and the fact that multiple customers faced similar issues supports the plausibility of mismanagement rather than a coordinated fraud scheme. The Police investigation's outcome cannot be assumed to prove APP scam elements.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website