Upheld: Authorised Push Payment (APP) scam - failure to reimburse under CRM Code complaint against Starling Bank Limited

Decision detail

Summary

H, a limited company, invested £93,150 with Company S in three tranches between July 2023 and April 2024, receiving £29,125 in returns before Company S directors were arrested in January 2025 and the company entered liquidation in July 2025. H claimed the investment was an APP scam and sought reimbursement of £64,015 from Starling Bank Limited. Starling refused, arguing it needed to wait for police investigation outcomes and that Company S was a failed legitimate investment rather than a scam. The ombudsman upheld the complaint, finding that Company S was operating a fraudulent scheme based on evidence that it had no underlying property agreements, paid returns exceeding legitimate income by 50%, and passed two-thirds of investor funds to another suspected scam without disclosure. H had a reasonable basis for believing Company S was legitimate at each investment stage, and no CRM Code exceptions to reimbursement applied. Starling was directed to refund £64,015 plus 8% simple interest from 9 February 2026.

The Ombudsman's reasoning

The ombudsman concluded that Company S was, on the balance of probabilities, operating a fraudulent scheme rather than a failed legitimate investment. Key evidence included: Company S sold investments without securing underlying property agreements, properties were unbuilt or unsuitable, returns paid exceeded legitimate income by 50% (indicative of a Ponzi scheme), and approximately two-thirds of investor funds were passed to another suspected scam without disclosure. H had a reasonable basis for believing Company S was legitimate at the time of each investment, having conducted online research and received expected returns. The payment to the solicitor did not prevent the CRM Code from applying as the solicitor was acting as a conduit for Company S, not as H's representative. None of the CRM Code exceptions to reimbursement applied: H had reasonable grounds for belief, no effective warning was provided, and Starling's inability to prevent the loss is not a valid exception under the CRM Code.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website