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Substantial FOS Award Against Bank Following Authorised Push Payment Fraud

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Following a complaint by customers about the way their bank dealt with Authorised Push Payment Fraud, Government-backed watchdog, the Financial Ombudsman Service (FOS), has awarded substantial compensation.

Trusted adviser/brand impersonation scams

Cybercriminals can use sophisticated techniques to deceive their victims into thinking they are their trusted advisers such as a solicitor, accountant, financial adviser, broker, or a well known brand such as a bank, building society, investment house, utility or broadband provider. The scammers then persuade their victims to make payments to them thinking they are legitimate, this is known as Authorised Push Payment (APP) Fraud.

In early 2022, the Government backed Financial Ombudsman Service (FOS) dealt with a case brought by the victims of this type of scam.

In 2019, Mr and Mrs M became the victims of an APP scam where scammers pretended to be well known financial institution, JP Morgan. The fraudsters persuaded the victims to pay out £345,750 from their Santander UK Plc bank account to a bank in Malaysia over the course of three monthly instalments.

The scam victims complained that the bank had not done enough to ensure the safety of their money. The bank argued that it did have protective measures in place, including speaking to Mr and Mrs M and querying what each of the payments were for.

As the victims were convinced that the transactions were legitimate, the payments went ahead. As a fourth payment was being arranged, the bank asked for far more details about the recipient. This then revealed that the JP Morgan account was in fact fake and had been highlighted on City watchdog, the Financial Conduct Authority’s website. Despite this discovery and attempts to get Mr and Mrs M’s payments back, the scam was found too late and the money had all gone.

In response to Mr and Mrs M’s complaint about allowing the payments to go out, Santander said that they had done enough and that the scam victims should have carried out more stringent checks themselves on who they were sending the payments to.

Mr and Mrs M then escalated the issue to FOS who deal with customer complaints against financial institutions, including banks.

Following its investigation, FOS found that Mr and Mrs M’s complaint was completely justified. In view of the banks’ regulatory framework, FOS felt that Santander should have monitored the accounts more closely given the risks of money-laundering, scams and financing terrorism. In addition, the bank should have been on the lookout for unusual transaction activity given the increasing sophistication of scams.

“I am satisfied there were enough ‘triggers’ in this case to have alerted a responsible regulated bank such as Santander that Mr and Mrs M’s account was being subjected to unusual and uncharacteristic activity.”

In addition, the Ombudsman found that the victims were not to blame at all for what happened, commenting:

“Mr and Mrs M were simply the unwitting and blameless victims of a clever fraudster. The bank was the professional in financial matters; Mr and Mrs M were laypeople.”

As a result of the Ombudsman’s decision, the scam victims received a refund of the money they’d lost, together with bank fees, interest and a payment for distress and inconvenience.

Head of professional negligence at TLW Solicitors, Sarah Spruce, said:

“The scams that people are falling victim to are becoming increasingly sophisticated. As the Ombudsman said, the banks know this and should have systems and processes in place to protect their customers at the first sign of any ‘red flags’ such as vulnerable customers and unusual or out of character transaction activity.

The Ombudsman in this decision looked very closely at whether the scam victims were in any way to blame for what happened and firmly reached the conclusion that they weren’t, they should reasonably have expected their bank to look after them.

Many APP scam victims are often too embarrassed or ashamed to admit that they have been defrauded, so it is important to keep vigilant, especially with those who are vulnerable and more susceptible to being scammed, such as the elderly or financially naïve, such as young adults and students.”

Get in touch with the police and also your bank as a matter of urgency. You can also report any suspected scamming activity to Action Fraud, the National Fraud and Cyber Crime Reporting Centre. If you have lost money, that may lead to a criminal investigation by the police. If a criminal prosecution is successful, the court can award compensation.

But this is not always possible, particularly if the scammer is overseas or has no assets which can be used to pay compensation. In addition, as with Mr and Mrs M’s case, you may have the basis of a complaint and claim against your bank if you feel that they did not do enough to look after your money.

The specialist team at TLW Solicitors has many years’ experience in successfully dealing with complaints to FOS, even where they have initially been rejected. We understand the time limits to be followed, the information needed and claims and appeals processes.

If you, a friend or a loved one has been conned into making payments to fraudsters by either writing a cheque or via online banking, then please get in touch with our specialist team for a confidential, no-obligation discussion.

You can call us on 0800 169 5925, email info@tlwsolicitors.co.uk or complete the enquiry form.

Time limits can apply and so anyone wishing to bring a claim should do so without delay.

Meet Our Team

Meet Sarah, who heads up our experienced Authorised Push Payment Fraud Claims team.

Sarah and her colleagues are on hand to help with your claim.

“I am satisfied there were enough ‘triggers’ in this case to have alerted a responsible regulated bank such as Santander that Mr and Mrs M’s account was being subjected to unusual and uncharacteristic activity.”

Financial Ombudsman Service