Not upheld: Fraud reimbursement (APP scams) complaint against Bank of Scotland plc trading as Halifax

Decision detail

Summary

Miss G and Mr M paid deposits totalling £12,225 to X for construction of a garage and made additional payments for other work. When they became unhappy with the work and X became difficult to contact, they cancelled the agreement and requested refunds. X refused, claiming he had spent the money on wages and materials. Miss G and Mr M claimed they were victims of a scam and requested reimbursement from Halifax, which declined on the basis that the matter was a private civil dispute. The ombudsman upheld Halifax's decision, finding insufficient evidence of fraudulent intent by X, noting that the delayed material purchases had a rational explanation (outstanding planning permission), X had maintained contact and performed some work, and deposits in construction contracts serve multiple purposes beyond immediate material purchase.

The Ombudsman's reasoning

The ombudsman applied the Faster Payments Scheme and CHAPS Reimbursement Rules, which require proof of fraud on the balance of probabilities. The ombudsman found insufficient evidence that X had fraudulent intent from the outset. Key factors included: (1) there was a rational explanation for why X had not purchased materials immediately (planning permission was outstanding); (2) X's decision to spend money on other things does not prove intent to deceive, as deposits serve multiple functions in construction contracts; (3) X maintained contact with Mr M for a significant period, which is unusual for a scammer but not conclusive; (4) X did perform some work (trench digging), suggesting possible legitimate intent; (5) while X's past conduct (Trading Standards prosecution, CCJs) was concerning, it did not prove dishonesty in this specific transaction; (6) the presence of CCJs and attempts to pay some customers back suggested X was not deliberately concealing his identity. The ombudsman concluded that while X's conduct was poor, it did not meet the threshold for fraud.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website