Partially upheld: Fraud reimbursement (APP scams) complaint against Nationwide Building Society

Decision detail

Summary

Mr D lost £46,500 to an investment fraud scheme operated by business 'U' through two payments made in October 2024 and February 2025. Nationwide initially refused reimbursement, treating it as a civil dispute. The ombudsman found Mr D was a victim of fraud and that the second payment (£21,500) was covered by the mandatory Reimbursement Rules introduced in October 2024, requiring reimbursement. However, the first payment (£25,000) fell outside the rules' scope as it was paid to an account held by the PSP rather than a service user. The ombudsman rejected arguments that Nationwide should have prevented the fraud, finding it was too sophisticated with no visible hallmarks at the time. Nationwide was directed to reimburse £20,079.01 (the second payment less a proportionate deduction for credits received) plus interest.

The Ombudsman's reasoning

The ombudsman applied the Reimbursement Rules which require PSPs to reimburse authorised push payments where the payer was a victim of fraud, processed via Faster Payments Scheme. The second payment fell within the scope of the rules as it was made after 7 October 2024 and met the definition of APP fraud. The first payment fell outside the scope because the receiving account was held by the PSP itself rather than a service user, and the PSP did not offer accounts to service users utilising FPS. Regarding Nationwide's duty to intervene: while PSPs should monitor for fraud risk, Nationwide could only be held liable where it could have prevented the loss. The fraud was complex and convincing with no common hallmarks of investment fraud visible at the time; the information proving U's fraudulent nature only emerged later. Therefore, Nationwide could not reasonably have prevented the first payment.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website