Upheld: service failure - excessive inconvenience during fraud prevention procedures complaint against Lloyds Bank PLC (Halifax)

Decision detail

Summary

Mr B complained that Lloyds blocked his £3,500 international payment to a new payee and caused him distress by requiring him to spend approximately 6 hours in a branch for verification checks, during which police were involved. Lloyds subsequently froze his account without clear notification, forcing him to use an alternative service provider to transfer funds. The ombudsman upheld the complaint, finding that while Lloyds reasonably blocked the transaction for fraud prevention purposes, it failed to satisfactorily explain the excessive time spent in branch, constituting unnecessary inconvenience. The ombudsman rejected Mr B's request for higher compensation, finding other inconveniences (multiple visits, phone calls) were not caused by Lloyds' failings, and upheld the £150 compensation award.

The Ombudsman's reasoning

While banks have a legitimate obligation to prevent fraud and flag unusual transactions (large amounts to new payees), Lloyds acted reasonably in blocking the payment and requiring verification checks. However, Lloyds failed to satisfactorily explain why Mr B had to spend approximately 6 hours in branch during the verification process, which constituted unnecessary inconvenience. The ombudsman found that the excessive time in branch, rather than the blocking itself or the requirement for verification, was the deficiency warranting compensation. Other complaints (multiple visits, phone calls, account freeze notification) were not caused by Lloyds' failings and therefore did not justify additional compensation.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website