Not upheld: irresponsible lending / failure to prevent APP scam / inadequate intervention complaint against HSBC UK Bank Plc

Decision detail

Summary

Mrs W lost £50,000 to a romance investment scam between November 2023 and January 2024, making five payments to an individual via a fraudulent app after being contacted by an unknown third party claiming cryptocurrency investment expertise. HSBC had identified Mrs W as a scam victim in early November 2023 regarding a related payment but declined to refund the subsequent losses, providing only a written warning rather than human intervention. The ombudsman found that whilst HSBC should have provided better intervention given the circumstances, Mrs W made the payments without reasonable basis for belief and would likely have proceeded regardless of intervention, as she continued making payments from multiple accounts and maintained contact with the scammer even after being warned by both family and the bank. The complaint was not upheld as HSBC was not found to be responsible for the loss under the CRM Code.

The Ombudsman's reasoning

The ombudsman found that whilst HSBC should have provided better intervention (human contact rather than written warning only), given the circumstances including prior scam identification, large payment amounts, new payee, and CoP no match, a valid exception to reimbursement under CRM Code R2(1)(c) applied. Mrs W made payments without reasonable basis for belief because: (1) she was contacted out of the blue by unknown third party; (2) she received app link from someone recently known; (3) she was told app 'F' was not genuine but continued using it; (4) she expressed doubts and felt pressured but proceeded anyway; (5) she was told not to discuss investment with others; (6) she showed determination to make payments from multiple accounts despite warnings. Even if HSBC had called Mrs W, the ombudsman concluded on balance of probabilities that she would likely have proceeded with payments given the third party had her 'under their spell' as evidenced by her continued contact even after family and bank warned her of scam. Vulnerability exception did not apply as Mrs W demonstrated capacity to question requests, had been given advice on checks to perform, and showed no evidence of inability to protect herself.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website