Not upheld: Fraud reimbursement (APP scams) complaint against HSBC UK Bank Plc

Decision detail

Summary

Mrs D engaged a builder for significant home renovations and made over 40 bank transfers totalling £187,060.25 between December 2021 and May 2025. The builder completed substantial work including demolition and partial construction but failed to finish the project or provide all paid-for items, eventually ceasing contact in June 2025 and subsequently being declared bankrupt. Mrs D claimed the payments were made as a result of an APP scam and requested reimbursement from HSBC. The ombudsman found that while the builder provided poor service and failed to fulfil the agreement, the evidence showed he was a genuine supplier who intended to perform the work at the time payments were made, making this a private civil dispute rather than an APP scam. Accordingly, HSBC was not required to reimburse Mrs D under the applicable CRM Code or Reimbursement Rules, which specifically exclude such disputes.

The Ombudsman's reasoning

The ombudsman applied the Contingent Reimbursement Model Code (CRM Code) and the Faster Payments Scheme Reimbursement Rules to determine whether an APP scam had occurred. Both frameworks specifically exclude private civil disputes where a customer has paid a legitimate supplier for goods or services but has not received them or they are defective. The ombudsman found that while the builder failed to complete the work and left the property in an unsatisfactory state, the evidence showed the builder was a genuine supplier who intended to perform the services at the time payments were made. Key factors supporting this conclusion were: (1) the builder completed substantial work over several years; (2) the builder's bank accounts showed typical business usage patterns; (3) account providers had no scam concerns; (4) the builder provided plausible reasons for delays (health issues, staffing problems, planning issues, financial difficulties); (5) the builder's subsequent bankruptcy suggested mismanagement rather than fraud; and (6) multiple families being affected suggested project mismanagement rather than a coordinated scam. The ombudsman concluded that non-completion of work due to poor management or financial failure does not constitute an APP scam under the applicable rules.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website