Not upheld: scam / fraud - refund of authorised international payments complaint against National Westminster Public Limited Company (NatWest)

Decision detail

Summary

Miss G, director of company G, made two large international payments (£1,000,000 and £637,036) to asset management company E as collateral to secure £4,000,000 in promised funding. E's CEO was later arrested and convicted for wire fraud, revealing E was operating a wide-scale scam. G complained to NatWest seeking refund of the payments, but NatWest declined as the payments were authorised and international (not covered by the CRM Code). The ombudsman found that while NatWest has duties to identify scam risks, at the time of the payments E appeared to be a legitimate business with considerable experience and media presence, and no information available would have indicated fraud. Therefore, the complaint was not upheld.

The Ombudsman's reasoning

While banks have a duty to exercise reasonable skill and care and identify customers at risk of scams, they can only reasonably intervene if there are sufficient grounds for suspecting the payee is a fraudster. At the time of the payments, E appeared to be a legitimate business with considerable experience, media presence, and awards. The agreement, while unusual, was not unheard of and many other large businesses had entered similar arrangements with E. No information available at the time would have indicated E was operating a scam, even to sources that might be expected to have more knowledge of E's business.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website