Upheld: Fraud reimbursement (APP scams) complaint against Starling Bank Limited
Financial Ombudsman decision DRN-6404147 of 2026-06-19T00:00:00+00:00. Fraud reimbursement (APP scams) complaint against Starling Bank Limited. Outcome: Upheld.
Decision detail
| Reference | DRN-6404147 |
|---|---|
| Decision date | 2026-06-19T00:00:00+00:00 |
| Firm | Starling Bank Limited |
| Product | Current account |
| Claim type | Fraud reimbursement (APP scams) |
| Outcome | Upheld |
| Remedy | Starling Bank Limited must: (1) refund J's outstanding loss of £7,215; and (2) pay simple interest on the refund using time-weighted average Bank of England base rate plus one percentage point, from 21 May 2026 (date of Investigator's view) until the date of settlement. Starling may take an assignment of rights to all future distributions to J under Official Receiver and police investigation processes to avoid double recovery. |
Summary
J, a limited company, invested £24,600 with Company S in March 2023 under a Rent-to-Rent Agreement and received 19 monthly returns before Company S entered liquidation following the arrest of its directors in January 2025. J claimed reimbursement of £7,215 outstanding loss from Starling Bank, arguing it was an APP scam, but Starling refused pending the outcome of police investigations. The ombudsman found that Company S was operating a fraudulent scheme based on evidence including lack of property rental agreements, diversion of two-thirds of investor funds to other likely scams, and payment patterns indicating a Ponzi scheme. J had a reasonable basis for believing Company S was legitimate given its professional presentation and Companies House registration. Starling could not demonstrate that any CRM Code exceptions applied, so the ombudsman upheld the complaint and directed Starling to reimburse J £7,215 plus interest.
The Ombudsman's reasoning
The ombudsman concluded that Company S was, on the balance of probabilities, operating a fraudulent scheme rather than a failed legitimate investment. Key evidence included: Company S had no rental agreements for properties it claimed to invest in; it passed two-thirds of investor funds to other likely scams without disclosure; it paid returns 50% higher than its legitimate income, suggesting a Ponzi scheme; and it used only 15% of £20 million in investment capital for genuine activity. The ombudsman found that J had a reasonable basis for believing Company S was legitimate at the time of investment, given the professional presentation, Companies House registration, and positive reviews. Starling could not demonstrate that any CRM Code exceptions to reimbursement applied, as the warning provided was not impactful for investment scams and no evidence of effective warnings complying with CRM Code requirements was provided. The ombudsman rejected Starling's argument that it couldn't prevent the loss, as inability to prevent loss is not a valid CRM Code exception.
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