Not upheld: Alleged APP scam / Irresponsible lending / Failure to prevent fraud complaint against HSBC UK Bank Plc

Decision detail

Summary

Mr A paid £50,417.18 to two building companies (F and R) represented by Mr K between March 2022 and July 2023 for major renovation work on his property. Mr K completed only a small fraction of the agreed work to a poor standard before stopping communication in October 2023, leaving Mr A to repurchase materials and hire another builder. Mr A claimed reimbursement from HSBC under the CRM Code for APP scams, arguing Mr K had scammed him from the start. The ombudsman found that while Mr K failed to deliver the promised services, the evidence did not establish that he intended fraudulent purposes at the time of the payments, as he attended the property, carried out work, communicated with Mr A, and provided a refund. The ombudsman concluded this was a civil dispute over poor service delivery rather than an APP scam, and therefore HSBC was not required to reimburse Mr A.

The Ombudsman's reasoning

The ombudsman applied the CRM Code definition of an APP scam, which requires payment to another person for what the customer believed were legitimate purposes but which were in fact fraudulent. The ombudsman found that while Mr K failed to complete the work to the agreed standard, the evidence did not establish that Mr K intended fraudulent purposes at the time of the payments. The builder attended the property, carried out work, communicated with Mr A, and even provided a small refund, which are not typical scammer behaviours. The ombudsman concluded that Mr K likely over-promised, poorly managed the project, or faced financial difficulties, rather than deliberately deceiving Mr A from the outset. The ombudsman also found that even if HSBC should have intervened on some larger payments, such intervention would not have prevented the loss as Mr A had legitimate reasons to believe the payments were for genuine building work.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website