Upheld: failure to prevent fraud/scam - irresponsible payment processing complaint against THE CO-OPERATIVE BANK P.L.C.

Decision detail

Summary

Mr B lost £1,682,242.75 to a cryptocurrency investment scam between June 2019 and October 2020, making 203 payments after being cold called by someone claiming to work for investment firm K. Co-op declined his fraud claim saying they lacked information. The ombudsman upheld the complaint, finding Co-op should have intervened at payment four with warnings about cryptocurrency investment scams, which would likely have prevented the loss. However, Mr B is held 50% responsible for failing to conduct basic checks on the broker and company before investing. Co-op was ordered to refund £231,828.86 (50% of the outstanding loss) plus 8% simple interest.

The Ombudsman's reasoning

Co-op had a duty to exercise reasonable skill and care and identify vulnerable consumers at risk of financial harm. By payment four, Co-op should have been concerned about the cryptocurrency-related payments totalling over £18,000 in three days and should have intervened with probing questions about the investment. If Co-op had asked open questions about why Mr B was moving money and what the payments were for, he would likely have disclosed the cold call, the broker arrangement, and the promised returns. Co-op should then have warned Mr B about the key features of cryptocurrency investment scams. Such a warning would more likely than not have prevented Mr B's loss from payment four onwards. However, Mr B shares responsibility as he failed to complete basic checks on the broker or company before investing, which would likely have revealed the FCA warning. Therefore, a 50% refund is fair.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website