Upheld: irresponsible lending / failure to prevent APP scam / ineffective scam warnings complaint against HSBC UK Bank PLC trading as First Direct
Financial Ombudsman decision DRN-6354665 of 2026-06-03T00:00:00+00:00. irresponsible lending / failure to prevent APP scam / ineffective scam warnings complaint against HSBC UK Bank PLC trading as First Direct. Outcome: Upheld.
Decision detail
| Reference | DRN-6354665 |
|---|---|
| Decision date | 2026-06-03T00:00:00+00:00 |
| Firm | HSBC UK Bank PLC trading as First Direct |
| Product | current account |
| Claim type | irresponsible lending / failure to prevent APP scam / ineffective scam warnings |
| Outcome | Upheld |
| Remedy | Pay Mr B £29,700 plus 8% simple interest per year from the date the claim was declined to the date of reimbursement. This comprises: full reimbursement of the first £10,000 payment (99% after proportionate credit deduction) plus 50% reimbursement of the subsequent £40,000 in payments (99% after proportionate credit deduction), reflecting shared liability under the CRM Code for payments two and three. |
Summary
Mr B was victim of an investment scam perpetrated by Company I, losing £50,000 across four transactions between August 2023 and March 2024. First Direct declined reimbursement citing scam warnings and insufficient due diligence. The ombudsman found that Mr B had a reasonable basis for believing the first £10,000 investment was legitimate based on Companies House records and positive reviews, but lacked reasonable basis for subsequent payments after Company I refused withdrawal without further investment. First Direct failed to provide effective warnings and did not meet CRM Code standards. The ombudsman upheld the complaint and ordered First Direct to reimburse £29,700 (full reimbursement of the first payment plus 50% of subsequent payments) plus 8% simple interest.
The Ombudsman's reasoning
The ombudsman applied the CRM Code framework, finding that Mr B had a reasonable basis for believing the first £10,000 investment was legitimate based on his research of Companies House records, positive reviews, and apparent trading history. However, for subsequent payments, Mr B lacked reasonable basis for belief because Company I's refusal to allow withdrawal without further investment was a significant red flag that should have prompted further investigation, which would have revealed the FCA warning. First Direct failed to provide effective warnings: the 'paying a bill' warning was irrelevant, and the investment scam warning was ineffective due to repetitive opening lines. First Direct also failed to warn on the final £10,000 payment despite risk factors. The £500 credit was an inducement for further investment, not genuine profit, and should be apportioned proportionately across all payments rather than deducted solely from the first payment.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| HSBC UK Bank PLC trading as First Direct, all decisions | 31 | 16% |
Source
Read the original decision on the Financial Ombudsman Service website