Not upheld: scam / investment fraud - failure to prevent complaint against Lloyds Bank PLC

Decision detail

Summary

Mr C, on behalf of company G, lost £100,000 in an investment scam after making two payments to an account with firm W in June 2024, with funds intended for investment with luxury goods supplier L. Mr C had been introduced to the opportunity by an overseas acquaintance and had travelled to meet the owner, review contracts and statements, and sign an agreement. When the investment proved to be a scam and the owner was arrested, Mr C sought a refund from Lloyds Bank PLC. The ombudsman found that while Lloyds should have intervened before processing the second £95,000 payment due to its high value, any proportionate intervention would not have revealed the scam because the investment appeared legitimate based on the circumstances Mr C would have disclosed. Therefore, the complaint was not upheld and no refund was ordered.

The Ombudsman's reasoning

While the ombudsman found that Lloyds should have intervened before processing the second £95,000 payment due to its high value, the key issue was causation. The ombudsman applied the test that to hold Lloyds liable, it must be shown that but for the failure to intervene, the loss would have been avoided. The ombudsman concluded that if Lloyds had questioned Mr C about the payment, he would have disclosed details that made the investment appear legitimate at the time: he had met the owner in person, seen contracts and statements, signed an agreement, and the company appeared to run legitimate business operations. An investment scam warning would not have resonated with Mr C given these circumstances. Therefore, the ombudsman could not find that a proportionate intervention would have prevented the loss.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website