Not upheld: Fraud reimbursement (APP scams) complaint against Nationwide Building Society

Decision detail

Summary

Miss C complained that Nationwide Building Society failed to reimburse £10,000 she transferred to her ex-partner Mr S in August 2022, which she believed was for investment purposes but was actually misappropriated. Miss C discovered in 2024 that Mr S had misrepresented himself, cloned her cards, and taken out credit in her name. The ombudsman found that while Miss C was undoubtedly misled and suffered financial harm, the evidence does not meet the high threshold required to establish that Mr S intended to defraud her from the outset, and therefore the payment does not qualify as an APP scam under the CRM Code. Nationwide's decision not to reimburse was upheld as the firm had no obligation to do so under applicable law, rules, or codes of practice.

The Ombudsman's reasoning

The ombudsman applied the CRM Code definition of APP scam, which requires establishing that: (1) there was a misalignment between Miss C's purpose and Mr S's purpose for the payment, and (2) this misalignment was due to dishonest deception by Mr S. While the ombudsman acknowledged Miss C was misled about Mr S's character and that the funds were not invested as promised, the high threshold for fraud (balance of probabilities, more likely than not) was not met. The evidence, including messages from Mr S suggesting he intended to return the funds through a property sale and his acknowledgment of the promissory note as legally enforceable, made it equally plausible that Mr S initially intended to repay the funds rather than defraud Miss C from the outset. The unusual circumstances of an intimate relationship with shared living arrangements and a child made deliberate fraud from the beginning less likely, though not impossible. Later events (property sale, non-registration of security) occurred 17 months after the payment and do not establish fraudulent intent at the time of payment.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website