Not upheld: scam reimbursement / Authorised Push Payment (APP) scam claim complaint against Barclays Bank UK PLC

Decision detail

Summary

Mr and Mrs H invested £277,850 in a holiday lodge development and rental scheme through their limited company, funded by shareholder loans from their personal joint account. After receiving quarterly returns for approximately one year, the investment company B stopped paying returns and entered administration. Mr and Mrs H claimed the loss was due to an APP scam and sought reimbursement from Barclays. The ombudsman rejected the complaint on two grounds: (1) the loss was suffered by their limited company, not personally, so they had no personal loss for which Barclays could be held responsible; and (2) there was insufficient evidence to establish an APP scam, as B appeared to be a legitimate business with genuine operations and no definitive evidence of fraudulent intent. Barclays was not required to reimburse the complainants.

The Ombudsman's reasoning

The ombudsman applied a two-stage analysis. First, it determined that the loss was suffered by Mr and Mrs H's limited company, not by Mr and Mrs H personally, because the investments were owned by the company and funded through shareholder loans. Since Mr and Mrs H did not personally suffer a loss, the CRM Code did not apply and Barclays had no obligation to reimburse. Second, even if the loss had been personal, the ombudsman found insufficient evidence to establish an APP scam. The evidence showed B was a legitimate company with genuine business operations (lodges developed and let as intended), funds were used for business purposes, and while misrepresentations may have been made by agents like K, this did not demonstrate fraudulent intent by B. The ombudsman noted that business failure does not automatically indicate fraud, and investigations alone do not prove criminal activity.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website