Not upheld: scam/fraud - failure to prevent investment fraud through inadequate intervention and warnings complaint against HSBC UK Bank Plc

Decision detail

Summary

Mr A lost over £70,000 in a pump and dump investment fraud after being contacted via social media and directed to purchase shares through a legitimate trading platform. He complained to HSBC that the bank should have done more to protect him through intervention and warnings. The ombudsman found that while HSBC should have intervened on one specific payment to ask questions, it was unlikely such intervention would have prevented the fraud, as pump and dump schemes are inherently difficult to identify and Mr A was clearly satisfied with the legitimacy of his transactions based on prior successful recommendations. The complaint was not upheld.

The Ombudsman's reasoning

While HSBC should have intervened on the £31,200 payment and asked questions, the ombudsman found it unlikely such intervention would have prevented the fraud. The scheme did not carry hallmarks typically associated with common investment frauds at the time. Pump and dump schemes are particularly difficult to unmask because victims purchase legitimate shares in legitimate companies, with the fraudulent nature only becoming apparent after the fact. Mr A had already followed prior recommendations from the scammer without incident, and was clearly satisfied the activity was legitimate based on the chat records. Therefore, a general warning would likely not have resonated with Mr A, making it unreasonable to hold HSBC liable.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website