Upheld: Authorised Push Payment (APP) Scam - Failure to Reimburse complaint against HSBC UK Bank Plc

Decision detail

Summary

Mr C invested £25,150 in what he believed was a legitimate property development investment opportunity with company S, introduced by his son. Payments were made to accounts opened in Mr C's name but controlled by the scammers, who rapidly disbursed the funds to unknown recipients. Although Mr C received small initial returns and had reasonable grounds to believe the investment was legitimate based on S being a registered company and his son's prior investment, the account providers' evidence confirmed the accounts were opened with false details and operated without Mr C's knowledge or control. The ombudsman found this constituted an APP scam under the CRM Code, with no applicable exceptions to reimbursement, and ordered HSBC to reimburse the full amount plus interest.

The Ombudsman's reasoning

The ombudsman found that although payments were made to accounts in Mr C's name, he did not open, operate or have access to these accounts, bringing the case within the scope of the CRM Code. The evidence from account providers confirmed incorrect details were used to open accounts and funds were rapidly disbursed to unknown recipients, indicating the funds were not used for the stated legitimate investment purpose. S obtained the funds through dishonest deception. Mr C had a reasonable basis for believing the investment was legitimate given S was a registered company, he had a personal recommendation from his son who had invested, documentation appeared legitimate, and he received initial returns. None of the CRM Code exceptions to reimbursement applied. HSBC's argument that it could not have prevented the loss is not a valid exception under the CRM Code.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website