Not upheld: scam claim refusal - authorised push payment (APP) scam complaint against Nationwide Building Society

Decision detail

Summary

Miss M paid £40,000 to a builder (Mr P) for home renovation work between February and October 2023. After initial work commenced in August 2023, the project stalled, Mr P failed to complete the work or return funds, and Miss M sought a refund from Nationwide, claiming she was the victim of a scam. Nationwide declined the scam claim, treating it as a civil dispute. The ombudsman upheld Nationwide's decision, finding that while the work was incomplete and Mr P's conduct was problematic, the evidence does not clearly demonstrate fraudulent intent from the outset, as Mr P did commence work (valued at approximately 25% of payments), maintained a legitimate beneficiary account, and statutory bodies declined to investigate. Therefore, the payments do not meet the CRM code definition of an APP scam, and Nationwide is not required to reimburse Miss M.

The Ombudsman's reasoning

The ombudsman applied the CRM code definition of an APP scam, which requires that funds were transferred for what the customer believed were legitimate purposes but which were in fact fraudulent. While Mr P failed to complete the work and requested payments outside the agreed schedule, the evidence does not clearly demonstrate fraudulent intent from the outset. The fact that Mr P commenced work (equating to 25% of payments), maintained a legitimate beneficiary account with normal building trade activity, and that statutory bodies declined to investigate, all suggest the project failed due to other factors such as poor organisation, incompetence, or financial difficulties rather than deliberate fraud. Without convincing evidence that fraud is the most likely explanation, the CRM code does not apply.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website