Upheld: fraud refund claim under CRM Code - scam property investment complaint against Lloyds Bank PLC

Decision detail

Summary

M, a limited company, lost £314,000 in a sophisticated property investment scam orchestrated by V, who sold properties he did not own and had no authority to sell. Mr B, M's director, was introduced to the investment by a trusted coworker and received what appeared to be legitimate documentation from a genuine solicitor firm, was shown the properties by V, and received keys allowing him to take possession and begin refurbishment. Lloyds initially declined the refund claim and later offered only 50%, arguing Mr B should have sought independent legal advice. The ombudsman upheld the complaint in full, finding that Mr B had a reasonable basis for believing the transactions were genuine and that Lloyds could not rely on CRM Code exceptions to deny reimbursement, ordering full refund plus interest.

The Ombudsman's reasoning

The ombudsman found that Mr B had a reasonable basis for believing the property purchases were genuine based on: a trusted personal referral from a coworker, legitimate-appearing documentation from a genuine solicitor firm, V's ability to access and show the properties with keys, the explanation that W was acting as escrow agent, and the fact that Mr B was able to take possession and begin refurbishment. The scam was sophisticated and there were no clear red flags that Mr B ignored. Therefore, Lloyds cannot rely on the CRM Code exception to deny reimbursement.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website