Upheld: failure to prevent fraud / irresponsible payment processing complaint against Santander UK Plc

Decision detail

Summary

Mr P fell victim to a sophisticated scam where fraudsters posing as law enforcement officials convinced him his bank account was involved in money laundering and he needed to transfer funds to a cryptocurrency account for verification. Over one week of near-constant contact, Mr P made three transfers totalling £11,700 to his own EMI account, which he immediately converted to cryptocurrency and sent to the scammers. Santander failed to intervene on the first £7,000 payment despite it being unusually large, out of character, to a new EMI account, and cryptocurrency-related. The ombudsman found that intervention would likely have uncovered the scam and prevented the loss. The ombudsman rejected Santander's arguments that the payment was not unusual and that it had no responsibility for payments to Mr P's own account, finding instead that Santander had a regulatory duty to prevent financial harm. The ombudsman also found Mr P should not bear responsibility given the sophisticated nature of the scam and his personal characteristics. Santander was ordered to refund all three payments plus 8% simple interest per annum.

The Ombudsman's reasoning

The ombudsman found that although Mr P authorised the payments, Santander had a regulatory responsibility to conduct business with due skill, care and diligence, and to prevent financial harm. The £7,000 payment was unusually large, out of character, to a new EMI account, and cryptocurrency-related. Santander should have intervened and spoken with Mr P about the payment, which would likely have uncovered the scam by breaking contact with the scammers and allowing Mr P to discuss the matter with another person. The ombudsman rejected arguments that the payment was not unusual given the previous £35,000 solicitor payment, as that was a one-off deposit-related transaction. The ombudsman also found Mr P should not bear responsibility for the loss given the sophisticated nature of the scam, the unrelenting contact from scammers, threats of imprisonment, and Mr P's characteristics which made him less likely to question what was happening without external input.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website