Not upheld: Fraud reimbursement (APP scams) complaint against Hargreaves Lansdown Asset Management Limited

Decision detail

Summary

Mr M fell victim to a sophisticated safe account scam in October 2025 where scammers impersonated a cryptocurrency exchange and manipulated him into withdrawing substantial funds from his Hargreaves accounts and transferring them through his own bank accounts to a cryptocurrency exchange, where they were stolen. The scammers created false urgency by claiming unauthorised access to his digital wallet and fraudulent credit applications, provided genuine supporting evidence, and coached Mr M extensively (65 calls over one week) on how to respond to bank interventions. Although Hargreaves and other banks provided multiple warnings about scam risks, Mr M had been pre-conditioned to expect and distrust such warnings. The ombudsman found that while Hargreaves' intervention could have been better, the Faster Payment Scheme Reimbursement Rules did not apply because funds were sent to accounts controlled by Mr M rather than directly to scammers. The ombudsman concluded that proportionate intervention would not more likely than not have prevented the loss given the scammers' demonstrated ability to overcome objections from multiple banks and Mr M's complete belief in the legitimacy of the payments.

The Ombudsman's reasoning

The ombudsman applied the Faster Payment Scheme Reimbursement Rules which came into force on 7 October 2024. These rules require reimbursement of APP scam victims in limited circumstances. However, the definition of an APP scam requires funds to be sent to an account not controlled by the consumer. Since Mr M's funds were sent to his own accounts with Bank N and Bank R which he controlled, the Reimbursement Rules did not apply. While good industry practice required Hargreaves to identify suspicious activity and intervene, the ombudsman found that the large payments made in quick succession to accounts in Mr M's name should have triggered intervention. However, to uphold the complaint, the ombudsman needed to be persuaded that proportionate intervention would more likely than not have prevented the loss. The ombudsman concluded this threshold was not met because: (1) Mr M was under intense psychological manipulation from scammers with whom he had 65 calls over one week; (2) he had been pre-conditioned to expect and distrust warnings; (3) he was coached in advance of bank calls; (4) he had no apparent doubts until after the final payment; and (5) the scammers demonstrated ability to overcome objections from multiple banks. The ombudsman found it most likely the scammers would have persuaded Mr M to continue even with better intervention.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website