Upheld: authorised push payment (APP) scam - failure to reimburse under CRM Code complaint against Starling Bank Limited
Financial Ombudsman decision DRN-6362801 of 2026-05-15T00:00:00+00:00. authorised push payment (APP) scam - failure to reimburse under CRM Code complaint against Starling Bank Limited. Outcome: Upheld.
Decision detail
| Reference | DRN-6362801 |
|---|---|
| Decision date | 2026-05-15T00:00:00+00:00 |
| Firm | Starling Bank Limited |
| Product | current account |
| Claim type | authorised push payment (APP) scam - failure to reimburse under CRM Code |
| Outcome | Upheld |
| Remedy | Starling Bank Limited must: (1) Refund Mr B's losses of £69,000 under the CRM Code; (2) Pay 8% simple interest calculated from the date the claim was declined until the date of settlement; (3) Provide a tax deduction certificate if requested; (4) Optionally take assignment of rights to all future distributions from the liquidation process to avoid double recovery, provided a draft assignment is first provided to Mr B for consideration and agreement |
Summary
Mr B invested £69,500 in Company A, which presented itself as a legitimate construction company raising funds for hotel installation projects. Company A entered administration owing investors over £25 million while holding only £4.4 million in genuine contracts, having misled investors about future work and diverted funds to sponsorships, fraudulent investments, and overseas transfers. Mr B requested reimbursement from Starling Bank, which declined. The ombudsman upheld the complaint, finding Mr B was the victim of an APP scam under the CRM Code definition, as Company A operated fraudulently outside its presented business model. Starling could not rely on exceptions to reimbursement because its warning was insufficiently specific and Mr B had reasonable grounds to believe the investment was legitimate. Starling was ordered to refund £69,000 plus 8% simple interest.
The Ombudsman's reasoning
The ombudsman determined that Mr B's payment met the CRM Code definition of an APP scam because the purpose Mr B had in mind (legitimate investment) differed significantly from Company A's actual purpose (fraudulent diversion of funds), and this difference resulted from dishonest deception. Company A operated outside the business model presented to investors, knowingly diverted funds, and misrepresented future work and insurance coverage. While some legitimate work was performed to create an illusion of legitimacy, the overall operation was fraudulent. Starling could not rely on exceptions to reimbursement because: (1) the warning provided was not specific or impactful enough to constitute an effective warning under the CRM Code; (2) Mr B had a reasonable basis for believing the investment was legitimate given the detailed documents and other investors receiving returns; and (3) the higher rate of return alone was insufficient to make the investment appear illegitimate in context. The ombudsman rejected Starling's argument that the complaint should be delayed pending police investigation, finding sufficient evidence already available to make a fair determination.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| Starling Bank Limited, all decisions | 992 | 25% |
Source
Read the original decision on the Financial Ombudsman Service website