Upheld: authorised push payment scam - failure to reimburse under CRM code complaint against Nationwide Building Society

Decision detail

Summary

Mr B invested £15,100 with a property investment company in March 2024, believing his funds would be used to rent a property and sub-let it to a social housing provider, generating monthly returns. The company paid returns until December 2024, when payments stopped and one of its directors was arrested. Mr B reported the payment as a scam and requested a refund, but Nationwide refused pending police investigation. The ombudsman found Mr B was the victim of a scam because the company passed investors' funds to rent-to-rent scheme operators contrary to stated purposes, operated a Ponzi-like scheme, and included non-existent or unsuitable properties in agreements. Nationwide failed to establish any CRM code exceptions to reimbursement, so the ombudsman ordered it to refund £10,585 (after deducting £4,515 in returns received) plus 8% interest from 19 January 2026.

The Ombudsman's reasoning

The ombudsman determined that Mr B was the victim of a scam as defined by the CRM code because the property investment company dishonestly deceived investors about the purpose of their payments. The funds were not used as intended; instead, they were passed to rent-to-rent scheme operators, and the company operated a Ponzi-like scheme paying out more in returns than received in legitimate income. The ombudsman rejected Nationwide's argument to delay the decision pending police investigation, finding sufficient evidence already available to reach a fair determination on the balance of probabilities. Nationwide failed to establish any of the CRM code exceptions to reimbursement, as there was no effective warning given to Mr B and he had a reasonable basis for believing the investment was legitimate based on professional documentation and his own checks.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website