Upheld: Authorised Push Payment (APP) scam - refund claim under Contingent Reimbursement Model Code complaint against HSBC UK Bank Plc

Decision detail

Summary

X lost £16,000 to an investment scam operated by company V in February 2023. V falsely claimed to be regulated by the CSSF and applying for FCA regulation, promised unsubstantiated returns, and misused investor funds by diverting them to cryptocurrency exchanges and personal accounts rather than Forex trading. X had conducted reasonable due diligence, including online research and review of professional materials, and had been referred by an FCA-regulated broker. HSBC refused to refund the loss pending external investigations and industry guidance on CRM Code coverage. The FOS upheld the complaint, finding X was victim of an APP scam covered by the CRM Code, that X had reasonable grounds to believe the investment was genuine, and that HSBC's warning was not effective for X's circumstances, therefore ordering full refund of £16,000 plus interest.

The Ombudsman's reasoning

The ombudsman determined it was appropriate to decide the complaint without waiting for external investigations to conclude, as sufficient evidence was already available. X's payment met the definition of an APP scam under the CRM Code because V obtained the funds through dishonest deception - the funds were not used for their stated purpose of Forex trading. HSBC could not rely on exceptions to reimbursement because X had a reasonable basis for believing the investment was genuine (referral from FCA-regulated broker, knowledge of other investors receiving returns, professional materials, claimed European regulation) and the warning provided was not effective as it addressed cold-called investments with pressure, which did not apply to X's circumstances.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website