Not upheld: scam reimbursement claim under Faster Payments reimbursement rules complaint against HSBC UK Bank Plc

Decision detail

Summary

Mr G invested £6,000 in whisky casks through Company W, which subsequently entered voluntary liquidation, leaving him unable to receive expected returns. He claimed HSBC should reimburse him under the Faster Payments reimbursement rules as a victim of an APP scam. HSBC declined, concluding Company W was a legitimate business that had failed. The ombudsman upheld HSBC's decision, finding that the liquidators' report indicated Company W began with genuine intentions and failed due to cash flow difficulties rather than fraudulent intent, meaning the circumstances constituted a private civil dispute rather than an APP scam. No reimbursement was ordered.

The Ombudsman's reasoning

The ombudsman applied the civil standard of proof (balance of probabilities) to determine whether fraud occurred. The key finding was that the liquidators' report, prepared by those with detailed access to Company W's records, indicated the business began legitimately but failed due to cash flow difficulties rather than fraudulent intent. The fact that Company W continued accepting investments while facing financial difficulties does not automatically constitute fraud, as companies may legitimately seek to improve cash flow while attempting to remain viable. The absence of any liquidator referral for criminal investigation was significant. Therefore, the circumstances constituted a private civil dispute (business failure) rather than an APP scam.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website