Not upheld: scam and fraud - investment scam, failure to prevent financial harm complaint against Starling Bank Limited

Decision detail

Summary

Mr W lost over £251,000 to an investment scam between September 2023 and April 2024, transferring funds from his Starling account to his own EMI account before the money reached the scammers. Starling refused to reimburse the loss, arguing it was used as a conduit to Mr W's own account. Although Starling conducted fraud reviews in November 2023 and asked appropriate questions about the transfers, Mr W provided plausible but misleading answers, claiming the EMI account was under his control and nobody was advising him, when in fact he had taken out five separate loans and was being coached by scammers. The ombudsman found that while Starling should have asked questions, Mr W's deceptive responses and demonstrated vulnerability to the scam made it unlikely that further intervention would have prevented the loss.

The Ombudsman's reasoning

The ombudsman applied the Payment Services Regulations framework, noting that while Mr W authorised the payments, Starling had a duty to exercise reasonable skill and care and identify potential risks of financial harm from fraud. Although the transactions to the EMI account were not unusual given Mr W's historical pattern of similar transfers, Starling did intervene in November 2023 and asked appropriate questions. However, Mr W provided plausible and misleading answers to key questions about the purpose of funds and whether anyone was advising him. The ombudsman found that Mr W was significantly under the scammer's influence, having taken out five loans and misled multiple financial institutions, and concluded it was unlikely that additional questioning by Starling would have broken the spell or revealed the scam, particularly given Mr W's demonstrated willingness to provide false information.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website