Not upheld: Fraud reimbursement (APP scams) complaint against Lloyds Bank PLC

Decision detail

Summary

The estate of Mr L complained that Lloyds Bank PLC failed to protect his accounts from fraudulent use by Mrs B, his long-term partner, who held a third-party mandate. Between December 2024 and January 2025, Mrs B transferred £230,000 from Mr L's savings, deposited two cheques totalling £150,000, and made other payments. Mr L passed away on 20 January 2025, and his son argued that Mrs B acted without Mr L's consent after he lost mental capacity. The ombudsman found that the third-party mandate constituted valid authorization for the transactions, that Lloyds were not informed of Mr L's loss of capacity, and that there was insufficient evidence to conclude Mr L did not consent to the payments. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that Mr L had given Mrs B formal agency through the third-party mandate, which constituted direct authority to act as his agent. While hospital notes suggest Mr L likely lost mental capacity by 31 December 2024, Lloyds were not informed of this deterioration and therefore reasonably continued to process transactions under the existing mandate. The ombudsman could not conclude that Mr L did not consent to the transactions without his testimony or evidence that he questioned the payments. Regarding the cheques, the signature appeared similar to Mr L's genuine signature, and the ombudsman found no evidence so unusual that Lloyds should have refused to honour them. The vulnerability marker did not require Lloyds to prevent Mrs B from acting as the chosen third-party in the absence of evidence of fraud.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website