Not upheld: Fraud reimbursement (APP scams) complaint against HSBC UK Bank PLC

Decision detail

Summary

Ms Y paid approximately £75,000 from her HSBC account to a builder for a home renovation project in 2024. Although significant work was completed, an independent surveyor found Ms Y had paid for 60% of the work but only approximately 25% had been completed. The builder terminated the contract and left the property unfinished. Ms Y reported the matter as a scam, but HSBC declined to reimburse her, concluding it was a civil dispute. The ombudsman upheld HSBC's decision, finding that while the work was incomplete and Ms Y overpaid, the circumstances did not meet the high legal threshold for an APP scam under the Faster Payments Scheme rules, as there was insufficient evidence the builder intended to defraud her from the outset. The ombudsman concluded this was a contractual dispute more appropriately resolved through civil courts.

The Ombudsman's reasoning

The ombudsman applied the Faster Payments Scheme reimbursement rules which define an APP scam as requiring fraudulent or dishonest conduct to manipulate or deceive a consumer into transferring funds for a purpose different from what was intended. The ombudsman concluded that while substantial work was not completed, there was insufficient evidence that the builder intended to defraud Ms Y from the outset. The presence of significant completed work (valued at approximately £57,000), the builder's legitimate business registration and account operations, and evidence of a relationship breakdown between the parties all pointed to a civil dispute rather than a premeditated scam. The ombudsman noted that builders commonly frontload payment schedules for material purchases, and that the breakdown appeared to stem from Ms Y's dissatisfaction with progress and the builder's unhappiness with Ms Y's conduct, rather than fraudulent intent from inception.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website