Not upheld: Fraud reimbursement (APP scams) complaint against Lloyds Bank PLC

Decision detail

Summary

Ms Y paid a registered building company over £56,000 for a home renovation project between July 2024 and January 2025. The builder completed significant work including demolitions, foundations, and walls, but the project fell behind schedule and was ultimately abandoned when the builder terminated the contract. An independent surveyor found Ms Y had paid for 60% of the work but only 25% was completed. Ms Y reported the matter as a scam to Lloyds, Trading Standards and police, but Lloyds declined to reimburse her. The ombudsman upheld Lloyds' decision, finding that the circumstances constitute a private civil dispute over incomplete work rather than an APP scam, as the builder appeared to be a legitimate company that completed substantial work and there was no evidence of fraudulent intent from the outset.

The Ombudsman's reasoning

The ombudsman applied the definitions of APP scams under both the CRM Code and FPS Rules, which require that payments were made for purposes that were fraudulent from the outset. The ombudsman found that Ms Y paid for legitimate renovation work and that the builder appeared to be a legitimate registered company that completed substantial work. The breakdown in the relationship and failure to complete work as agreed constitutes a private civil dispute specifically excluded from APP scam coverage, not evidence of fraud from the outset. The substantial amount of work completed (valued at approximately £57,000) and the legitimate front-loading of payments for materials indicated a genuine business relationship that deteriorated, rather than a scam.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website