Partially upheld: failure to prevent scam through inadequate fraud intervention complaint against HSBC UK Bank Plc

Decision detail

Summary

Mr L fell victim to a sophisticated cryptocurrency investment scam after seeing a celebrity-endorsed social media advert. He made a £20,000 payment from his HSBC account to what he believed was a legitimate investment platform, but was actually a scam. HSBC intervened before processing the payment and spoke to Mr L, who provided a cover story about purchasing training and software for a new business. The ombudsman found that HSBC should have asked more probing questions given the unusual nature of the transaction and the red flags present, which would likely have exposed the scam. However, the ombudsman also found that Mr L bore some responsibility for missing warning signs and not being fully honest with the bank. The complaint was upheld in part, with HSBC ordered to refund 50% of the payment (£10,000) plus interest.

The Ombudsman's reasoning

The ombudsman found that while HSBC was right to be concerned about the payment and to intervene, the intervention was not sufficiently probing. The scenario presented (a man in his seventies paying £20,000 for ten months of training and software for a new business on a new account) contained multiple red flags: payment details texted rather than invoiced, the unusual nature of the business venture, the length of training, and Mr L's apparent lack of tech-savviness. Had HSBC asked follow-up questions, Mr L would likely not have been able to provide satisfactory answers, as he had only a vague cover story prepared. The ombudsman concluded that proportionate questioning would have exposed the scam. However, Mr L also bore responsibility for missing clear warning signs (too-good-to-be-true returns, the need to hide the investment, stress and health impacts), so a 50% contributory negligence reduction was applied.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website