Upheld: APP scam reimbursement under CRM Code complaint against Starling Bank Limited

Decision detail

Summary

Mr D invested £36,000 with Company U, a property investment company that promised 20% annual returns, receiving £24,366.35 in returns before the company entered administration in July 2025, leaving a loss of £11,633.65. Starling Bank declined reimbursement under the CRM Code, classifying it as a civil dispute over a failed investment rather than a scam. The FOS Investigator upheld the complaint, and the ombudsman agreed, finding that Company U was operating a sophisticated Ponzi scheme that marketed properties it did not own, falsely claimed government-backed returns, and used investor funds to pay other investors. The ombudsman found Mr D had a reasonable basis for belief in the investment's legitimacy and that Starling's warning was not effective, so Starling must refund the outstanding loss plus 8% interest.

The Ombudsman's reasoning

The ombudsman found that Company U was operating a sophisticated scam that met the CRM Code definition of an APP scam. Although Company U appeared legitimate with years of operation, Companies House registration, and apparent business activities, the evidence demonstrated it was a Ponzi scheme: it marketed properties it did not own, falsely claimed government-backed guaranteed returns, misrepresented relationships with organisations, and used investor funds to pay other investors rather than for stated purposes. Mr D had a reasonable basis for belief in the investment's legitimacy given the scam's sophistication, in-person meetings with staff, professional documentation, and receipt of expected returns. The warning provided by Starling was not effective under CRM Code criteria, and even a more tailored warning would not have prevented the fraud given the scheme's apparent legitimacy. Therefore, Starling cannot rely on any exceptions to reimbursement.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website