Upheld: Authorised Push Payment (APP) scam - fraud and failure to reimburse under CRM Code complaint against Nationwide Building Society

Decision detail

Summary

Mr M and Mrs M invested £60,400 in what they believed was a legitimate rent-to-rent investment scheme operated by company S, making payments to law firm N acting on S's behalf. The investment returns stopped and they discovered they were victims of a scam. The ombudsman found that S was operating an APP scam by redirecting investor funds to other companies, misrepresenting property ownership and suitability, and operating a Ponzi-like scheme. Although Nationwide initially questioned whether this constituted an APP scam, the ombudsman determined it was clearly covered by the CRM Code. Mr M and Mrs M had a reasonable basis for believing the investment was legitimate based on Companies House registration, professional documentation, and law firm involvement. Nationwide could not rely on any exceptions to reimbursement and was ordered to refund £33,925 (the outstanding loss after deducting £26,475 in returns received) plus 8% simple interest from 12 February 2026.

The Ombudsman's reasoning

The ombudsman determined that S was operating an APP scam through dishonest deception, evidenced by redirecting investor funds to other companies, misrepresenting property ownership and suitability, operating a Ponzi-like scheme, and investing funds outside agreed terms. Although payments were made to law firm N, N was acting as agent for S and funds were no longer under the customers' control. Mr M and Mrs M had a reasonable basis for believing the investment was legitimate based on Companies House registration, professional documentation, law firm involvement, and positive reviews. Nationwide provided no effective warnings and cannot rely on any CRM Code exceptions to reimbursement.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website