Upheld: Fraud reimbursement (APP scams) complaint against Starling Bank Limited
Financial Ombudsman decision DRN-6397778 of 2026-06-18T00:00:00+00:00. Fraud reimbursement (APP scams) complaint against Starling Bank Limited. Outcome: Upheld.
Decision detail
| Reference | DRN-6397778 |
|---|---|
| Decision date | 2026-06-18T00:00:00+00:00 |
| Firm | Starling Bank Limited |
| Product | Current account |
| Claim type | Fraud reimbursement (APP scams) |
| Outcome | Upheld |
| Remedy | Starling Bank Limited must: (1) refund Mr A's outstanding loss of £18,130; (2) pay simple interest on the refund using time-weighted average Bank of England base rate plus one percentage point from 18 May 2026 until date of settlement; (3) Starling may take assignment of rights to all future distributions to Mr A under Official Receiver and police investigation processes to avoid double recovery. The previously offered £200 compensation for poor customer service is deemed fair and no additional compensation is required. |
Summary
Mr A invested £30,100 with Company S in January 2024 under a Rent-to-Rent Agreement, receiving nine monthly returns before Company S directors were arrested in January 2025 and the company entered liquidation in July 2025. Mr A claimed he was the victim of an APP scam and sought reimbursement from Starling Bank Limited, but Starling initially refused to decide pending the outcome of police and Official Receiver investigations. The ombudsman concluded that Company S was operating a fraudulent Ponzi scheme, evidenced by selling investments without underlying property agreements, passing two-thirds of funds to another suspected scam without disclosure, and paying returns that exceeded legitimate income by 50%. Finding that Mr A had a reasonable basis for believing Company S was legitimate and that Starling's scam warnings were not 'Effective Warnings' under the CRM Code, the ombudsman upheld the complaint and directed Starling to reimburse Mr A's outstanding loss of £18,130 plus interest.
The Ombudsman's reasoning
The ombudsman concluded that on the balance of probabilities, Company S was operating a fraudulent scheme rather than a genuine failed investment. Key evidence included: Company S sold investments without underlying property agreements, sold investments in unbuilt properties, passed two-thirds of funds to another suspected scam (Company C) without disclosure, and paid returns to investors (£6,000,000) that were 50% more than any potentially genuine income received - indicative of a Ponzi scheme. Although Company S undertook some legitimate activities, only approximately 15% of the £20,000,000 investment capital received was used for genuine activity. The ombudsman found Mr A had a reasonable basis for believing Company S was legitimate at the time of investment, and that Starling's scam warnings were not 'Effective Warnings' under the CRM Code as they did not address investment scams. Therefore, no exceptions to reimbursement under the CRM Code applied.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| Starling Bank Limited, all decisions | 1,021 | 25% |
| Fraud reimbursement (APP scams), all decisions | 20,976 | 21% |
| Current account, all decisions | 52,014 | 19% |
Source
Read the original decision on the Financial Ombudsman Service website