Partially upheld: irresponsible processing of payments / failure to intervene in APP scam complaint against Lloyds Bank PLC

Decision detail

Summary

Mr A lost over £85,000 in payments 30-35 of a cryptocurrency investment scam orchestrated by company R. Lloyds declined to refund, arguing they had not made an error in processing authorised payments. The ombudsman found Lloyds should have intervened when payment 30 (£10,000 to new payee K) was made, as it was unusual and out of character, and intervention would likely have prevented the loss. However, Mr A had expressed concerns about the investment from August 2023, been unable to withdraw funds despite promises, and received explicit scam warnings from two other financial institutions in December 2023/January 2024 before making payment 30 in February 2024. The ombudsman upheld the complaint partially, ordering Lloyds to refund 50% of payments 30-35 (£42,868) plus 8% interest, reflecting shared responsibility between Lloyds' failure to intervene and Mr A's failure to take reasonable steps to mitigate his loss despite clear warning signs.

The Ombudsman's reasoning

While Lloyds should have intervened when payment 30 was made (as it was unusual and to a new payee), Mr A bears contributory responsibility for his loss. By the time of payment 30, Mr A had expressed concerns about the investment, been unable to withdraw funds despite promises, and received explicit warnings from two other financial institutions that he was likely being scammed. A reasonable person would have conducted basic checks and likely found the FCA warning about company R. Therefore, a 50% deduction for contributory negligence is fair, reflecting shared responsibility between Lloyds' failure to intervene and Mr A's failure to take reasonable steps to mitigate his loss despite clear warning signs.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website