Not upheld: scam/fraud - refund claim for investment scam complaint against Barclays Bank UK PLC

Decision detail

Summary

Mr and Mrs G invested £70,000 with Company F, a purported foreign exchange trading company offering mini-bonds with 8% returns, in March 2019. Company F subsequently entered administration and liquidation, and in February 2024 Mr and Mrs G reported it as a scam and sought refund from Barclays. The ombudsman found that Company F was indeed running a scam based on implausible trading claims and insolvency investigation findings, but determined that Barclays could not have detected this fraud at the time of the payments. Although Barclays should have intervened on the high-value £50,000 payment, the investment appeared legitimate from external perspective with six years of Companies House history, and even with appropriate intervention and warnings, the customer would likely have proceeded. Consequently, the complaint was not upheld and no refund was ordered.

The Ombudsman's reasoning

Although the ombudsman agreed that Company F was running a scam based on implausible trading claims, lack of evidence of the algorithm, director disqualification, and missing accounting records, the key issue was whether Barclays could have detected this at the time of the payments. While Barclays should have intervened on the £50,000 payment due to its high value and the rejected payment immediately before it, the ombudsman found that even with intervention and appropriate questioning, Barclays would not have uncovered fraud indicators. The investment appeared legitimate from external perspective: Company F had six years of Companies House history, the customer had been introduced by a broker, and unregulated mini-bonds with 8% returns were not inherently suspicious in 2019. The ombudsman concluded that a conversation about investment scams would not have deterred Mr and Mrs G, who had recently invested in other mini-bonds and appeared to be making informed decisions.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website