Upheld: Authorised Push Payment (APP) Scam - Investment Fraud - Failure to Reimburse under CRM Code complaint against Starling Bank Limited
Financial Ombudsman decision DRN-6301776 of 2026-05-07T00:00:00+00:00. Authorised Push Payment (APP) Scam - Investment Fraud - Failure to Reimburse under CRM Code complaint against Starling Bank Limited. Outcome: Upheld.
Decision detail
| Reference | DRN-6301776 |
|---|---|
| Decision date | 2026-05-07T00:00:00+00:00 |
| Firm | Starling Bank Limited |
| Product | current account |
| Claim type | Authorised Push Payment (APP) Scam - Investment Fraud - Failure to Reimburse under CRM Code |
| Outcome | Upheld |
| Remedy | Starling Bank Limited must: (1) refund Ms Y's outstanding loss of £9,140.59; and (2) pay simple interest on the refund using time-weighted average Bank of England base rate plus one percentage point from 10 April 2026 (date of Investigator's view) until date of settlement. Starling may take assignment of rights to all future distributions to Ms Y from Official Receiver and police investigations to avoid double recovery. |
Summary
Ms Y invested £25,000 with Company S in February 2023 under a loan agreement promising monthly repayments. Company S made payments for approximately two years before its directors were arrested in January 2025 and the company entered liquidation in July 2025. Ms Y complained to Starling in December 2025 seeking reimbursement of her £9,140.59 outstanding loss, claiming she was victim of an APP scam. Starling refused, arguing Company S was a failed legitimate investment and that it was obligated to process the authorised payment. The ombudsman upheld the complaint, finding that Company S was operating a Ponzi scheme based on evidence that it received over £3.2 million from investors but used less than £1.1 million for stated purposes, made significant losses yet paid substantial returns, and diverted most new investment funds to directors and fraudulent third parties. Ms Y had a reasonable basis for believing Company S was legitimate, and Starling's generic warnings were not effective under the CRM Code. Starling was directed to reimburse Ms Y's loss plus interest.
The Ombudsman's reasoning
The ombudsman determined that Company S was operating a Ponzi scheme rather than a legitimate investment based on the collective weight of evidence: it had no rental agreements despite claiming rent-to-rent model, used only 15% of investment capital for stated purpose, made significant losses yet paid substantial returns to investors, and in the month of Ms Y's investment sent 95% of new investor funds elsewhere or to directors. Although Company S engaged in some legitimate activity which added plausibility to the scam, the evidence demonstrated it intended to defraud Ms Y through dishonest deception. Ms Y had a reasonable basis for believing Company S was legitimate given the brother's recommendation, three-year Companies House registration, professional documentation, and absence of negative information. The warnings provided by Starling were not 'Effective Warnings' under the CRM Code as they contained no information about how investment scams operate and verifying the payee destination would not have prevented the scam since Ms Y intended to pay Company S. Therefore, no exceptions to reimbursement under the CRM Code applied.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| Starling Bank Limited, all decisions | 992 | 25% |
Source
Read the original decision on the Financial Ombudsman Service website