Not upheld: scam protection and fraud liability complaint against HSBC UK Bank Plc trading as first direct

Decision detail

Summary

Mr I invested £22,800 in a forex investment opportunity in October 2019 after seeing a social media advert by unregulated company G, which directed him to sign an agreement with trader C and invest through platform X. The investment lost nearly all its value by December 2019. Mr I complained to First Direct in May 2025, claiming the bank should have protected him from the scam. The ombudsman found that while G operated without regulation and exhibited scam characteristics, the funds were actually paid to legitimate platform X and lost through real forex trades rather than fraud. The ombudsman was also unable to verify the source of the funds due to multiple large cash deposits and transfers from various accounts. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman concluded that while some aspects of the scheme bore hallmarks of investment scams (social media advertising, unrealistic returns, instant messaging contact), the critical distinction was that funds were not sent to the unregulated company G but to the legitimate investment platform X. The evidence supported that real forex trades occurred and were lost through market movements rather than fraud. The ombudsman was not satisfied that Mr I had sufficiently corroborated the source of the funds, particularly regarding multiple large cash deposits and transfers from various accounts prior to the disputed payment. The website domain change was explained by X's legitimate domain migration. The sudden account freeze was attributed to reaching the platform's margin tolerance limit after accumulating losses, not a coordinated fraudulent event. Withdrawal restrictions were linked to the multi-account manager structure and tied-up positions rather than fraud.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website