Not upheld: scam and fraud - failure to prevent or intervene complaint against HSBC UK Bank Plc

Decision detail

Summary

Mrs J lost £4,831.50 to a scam involving a fake holiday company, making four payments between February and April 2025. She complained to HSBC, which offered £500 compensation for service errors but refused to refund the scam losses. The ombudsman found that the payment pattern (modest values, spread over three months, to different merchants) was not sufficiently unusual or suspicious to require HSBC to intervene. While HSBC should monitor for fraud risks, the ombudsman balanced this against the practical need to avoid disrupting legitimate transactions. The £500 compensation for service errors was upheld as fair, but the complaint was not upheld regarding the scam losses, as HSBC was not found responsible for the fraud.

The Ombudsman's reasoning

The ombudsman found that while HSBC should monitor for fraud risks, the payments in this case were not sufficiently unusual or suspicious to warrant intervention. The payment values were modest, the frequency and escalation pattern did not indicate a typical scam, and the destinations, though varied, did not present obvious risk factors that would justify disrupting legitimate payments. The ombudsman balanced the need to prevent fraud against the practical necessity of not blocking genuine transactions. Although HSBC made errors in its service (sending an incorrect refund letter and causing delays), these errors did not cause the scam loss itself, and the £500 compensation fairly reflected the impact of those service failures.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website