Upheld: Fraud reimbursement (APP scams) complaint against HSBC UK Bank Plc
Financial Ombudsman decision DRN-6246387 of 2026-06-25T00:00:00+00:00. Fraud reimbursement (APP scams) complaint against HSBC UK Bank Plc. Outcome: Upheld.
Decision detail
| Reference | DRN-6246387 |
|---|---|
| Decision date | 2026-06-25T00:00:00+00:00 |
| Firm | HSBC UK Bank Plc |
| Product | Personal loan |
| Claim type | Fraud reimbursement (APP scams) |
| Outcome | Upheld |
| Remedy | HSBC must reimburse Mr D £36,300 (total loss of £40,500 minus returns received of £4,200) plus 8% simple interest per annum calculated from 15 business days after Mr D reported the APP scam. HSBC can discuss with Mr D whether the reimbursement should be applied to offset the outstanding £25,000 loan. HSBC is entitled to take assignment of rights to future distributions from police investigation and criminal proceedings to avoid double recovery. HSBC must provide tax deduction certificate if required. |
Summary
Mr D invested £40,500 with Company C (a fraudulent property investment scheme) between April and July 2024, funding £25,000 through an HSBC personal loan. After initially receiving returns, Mr D discovered Company C was a scam and claimed reimbursement from HSBC under the Contingent Reimbursement Model (CRM) Code. HSBC delayed its decision pending the outcome of a police investigation. The ombudsman upheld the complaint, finding overwhelming evidence that Company C operated a Ponzi scheme with no legitimate business operations, and that HSBC should have reimbursed Mr D's loss of £36,300 without delay. HSBC was directed to pay the reimbursement plus 8% simple interest from 15 business days after the scam was reported.
The Ombudsman's reasoning
The ombudsman determined that Mr D met the CRM Code definition of an APP scam victim because he transferred funds for what he believed were legitimate purposes (property investment) but which were in fact fraudulent. The evidence overwhelmingly demonstrated Company C was operating a scam, including the significant discrepancy between funds received and property development spending, absence of legitimate rental income, use of forged documents, and operation of a Ponzi scheme. HSBC could not establish any exceptions to reimbursement applied, including that an effective warning was given or that Mr D lacked reasonable basis to believe Company C was legitimate. The ombudsman rejected HSBC's argument that the case was unsuitable for FOS determination or that the CRM Code was not designed to cover such situations, finding that it was designed precisely to protect APP scam victims.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| HSBC UK Bank Plc, all decisions | 7,578 | 23% |
| Fraud reimbursement (APP scams), all decisions | 20,976 | 21% |
| Personal loan, all decisions | 23,643 | 29% |
Source
Read the original decision on the Financial Ombudsman Service website