Not upheld: Authorised Push Payment (APP) scam claim / fraud complaint against Starling Bank Limited

Decision detail

Summary

Mr M complained that Starling Bank should refund £10,003.72 he lost on an investment in company N, claiming it was a scam. Starling declined, characterizing it as a failed high-risk investment not covered by the Contingent Reimbursement Model Code (CRM Code). The ombudsman found that the investment was genuine, evidenced by the share certificate Mr M received and the HMRC tax relief payment of £3,055.36, and that all parties' purposes were aligned. Although the parent company B subsequently faced FCA restrictions and entered administration, this did not constitute fraudulent deception. The ombudsman concluded that Starling's onscreen warning was appropriate and that even enhanced intervention would not have prevented the loss, as all available information indicated the investment was legitimate and offered by FCA-regulated entities.

The Ombudsman's reasoning

The ombudsman found that Mr M did not meet the definition of an APP scam victim under the CRM Code because the purposes of both parties were aligned - Mr M intended to invest and the funds were transferred to B/N as intended. The receipt of a share certificate and HMRC tax relief payment evidenced that the investment was genuine. While B subsequently failed and the FCA placed restrictions on it, poor business practices or regulatory failures do not constitute fraud. The ombudsman concluded that Starling's onscreen warning was appropriate and that even a phone call would not have prevented the loss, as all available information suggested the investment was legitimate and offered by FCA-regulated entities.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website