Not upheld: Fraud reimbursement (APP scams) complaint against Cynergy Bank Plc

Decision detail

Summary

S, a limited company, complained that Cynergy Bank Plc failed to refund £81,999 lost in a sophisticated authorised push payment (APP) safe account scam. Mr M, a director of S, was manipulated by scammers impersonating a cryptocurrency exchange over approximately 20 hours of calls into making eight faster payments from S's Cynergy account to S's account with another bank, from which the funds were subsequently moved through Mr M's personal accounts to a cryptocurrency exchange and stolen. Although Cynergy failed to identify suspicious transaction patterns and provide adequate warnings, the ombudsman did not uphold the complaint because the evidence did not demonstrate that proportionate intervention would more likely than not have prevented the loss, given the extreme sophistication of the scam, the extensive manipulation and coaching by scammers, and Mr M's pre-conditioning to distrust banking warnings. The ombudsman also noted that the Faster Payment Scheme Reimbursement Rules did not apply because funds were sent to an account controlled by Mr M rather than the scammers.

The Ombudsman's reasoning

The ombudsman acknowledged that Cynergy failed to identify suspicious transaction patterns and provide adequate scam warnings, which fell below good industry practice standards. However, the ombudsman applied the legal test that a firm's failure to intervene does not automatically make it responsible for the customer's loss. The ombudsman had to determine whether proportionate intervention would more likely than not have prevented the loss. Despite Mr M's belief that intervention would have caused him to pause and reconsider, the ombudsman was not persuaded this was more likely than not, given: (1) the extreme sophistication of the scam; (2) the extensive manipulation and coaching by scammers over 20 hours of calls; (3) Mr M's pre-conditioning to distrust and ignore warnings; (4) the plausibility of the scam narrative; (5) Mr M's lack of demonstrated doubt until after the final payment; and (6) the scammers' demonstrated ability to overcome Mr M's objections with minimal persuasion. The ombudsman also noted that the Faster Payment Scheme Reimbursement Rules did not apply because funds were sent to an account controlled by Mr M (S's account with Bank S), not to an account controlled by the scammers. Additionally, Cynergy was unaware of Mr M's potential vulnerability and could not have implemented additional protective measures.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website