HSBC UK Bank plc · DRN-6247194

The complaint Mr R complains that HSBC UK bank Plc hasn’t refunded the money he lost to a fraudulent investment scheme. What happened In October 2024, Mr R’s girlfriend received an unsolicited WhatsApp message from an individual claiming to be able to offer investment advice. This person appeared to be a man I will call Mr M, who was a well-known investment fund manager with a legitimate, FCA registered, investment firm. Mr R says he checked Mr M’s website and profile and was satisfied that he was legitimate, so he and his girlfriend decided to invest. Mr R was added to a chat group where Mr M shared tips on stocks to buy, Mr R used a trading account in his own name (with a company I will call W) to buy these stocks, and initially everything appeared to be going well. But when the value of Mr R’s stocks fell, and he was told by Mr M that he was not allowed to sell the stocks or he would have to leave the investment group, Mr R became suspicious. Ultimately, he realised he had likely been the victim of a ‘pump and dump’ scheme, where investors are encouraged to buy stock to artificially inflate the price of that stock so that the scammers can sell their own stock at a profit (causing the stock value to plummet). But by this time Mr R had put £48,900 into buying stocks on Mr M’s advice, and he was only able to recover £4,745 of this. So, Mr R contacted HSBC and asked it to reimburse his loss. HSBC refused to reimburse Mr R. It said Mr R had sent funds to his own trading account with W and so these were me-to-me payments which would not be covered by the relevant reimbursement rules. It also said that it did not believe the payments had appeared unusual. As a result, HSBC didn’t think it was responsible for reimbursing Mr R’s loss. Unhappy with HSBC’s response, Mr R referred a complaint to this service. Our Investigator considered the complaint but didn’t uphold it. In summary, they didn’t think HSBC reasonably could’ve prevented Mr R’s loss. They thought HSBC ought to have questioned Mr R about some of the payments he made, but they didn’t think they would have been able to identify that Mr R was at risk of this scam. Our Investigator also didn’t think HSBC could’ve done anything to recover Mr R’s loss once it was aware of the situation. Mr R didn’t accept our Investigator’s opinion. He said that if HSBC had intervened to question him about the payments, there were enough red flags that it should have identified he was at risk of a scam and so could have prevented these payments being made. As an agreement couldn’t be reached, the complaint has been passed to me to decide. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint.

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In deciding what’s fair and reasonable in all the circumstances of a complaint, I’m required to take into account relevant: law and regulations; regulators’ rules, guidance and standards; codes of practice; and, where appropriate, what I consider to have been good industry practice at the time. In broad terms, the starting position at law is that a firm is expected to process payments and withdrawals that a customer authorises, in accordance with the Payment Services Regulations (in this case, the 2017 regulations) and the terms and conditions of the customer’s account. It’s not in dispute that Mr R made the disputed payments to W. So, the payments were authorised and under the Payment Services Regulations, the starting position here is that Mr R is responsible for the payments (and the subsequent loss). However, that’s not the end of the story. From 7 October 2024 onwards, Payment Services Providers in the UK, like HSBC, have been bound by the Faster Payments Scheme (FPS) and the CHAPS reimbursement rules. Under these rules, most victims of Authorised Push Payment (APP) scams should be reimbursed – but not all types of payment are covered. Specifically, the reimbursement rules do not apply to payments a customer has made to another account in their name. And in this case, we are aware that Mr R paid an account at W that was in his own name and that he alone had full control of. So, in the circumstances of Mr R’s case, the reimbursement rules do not apply. Mr R’s payments from HSBC were sent to W (a legitimate payee) and deposited into his trading account for the legitimate purpose of buying stocks. But it seems more likely than not that Mr R was induced into buying stocks, under false pretences, for the benefit of a third party and that he was dishonesty deceived into making those transactions – i.e., he’s been the victim of fraud. And good industry practice required HSBC to be on the lookout for account activity or payments that were unusual or out of character to the extent that they might indicate a fraud risk. On spotting such a payment, I’d expect it to take steps to warn the customer about the risks of proceeding. So, I’ve considered whether HSBC reasonably ought to have been concerned by Mr R’s payments to the extent that it ought to have questioned him about the payments and, importantly, whether proportionate intervention would’ve identified the scam and prevented Mr R from going ahead with the payments. And having done so, I agree with our investigator that it is arguable HSBC should have intervened in the later payments Mr R was making, given that they were relatively high in value and represented a change in how Mr R was using his account. But even though HSBC didn’t intervene, this doesn’t mean that they are automatically liable for Mr R’s loss. In order for me to find HSBC liable, at least in part, for Mr R’s loss, I need to be persuaded that HSBC’s intervention would have prevented that loss. If HSBC had spoken to Mr R prior to him making any of the larger payments, I have little doubt that he would’ve been honest with his answers. As such, I think he would’ve explained that he was paying his own trading account with W, which was a legitimate FCA regulated firm, for the purpose of buying stocks. Mr R wasn’t paying a third party or intending to use his trading account with W as an intermediary to move the funds on to a third party, as is common with investment scams. He would’ve likely explained that he had previously successfully credited his trading account

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with W and purchased stocks in real companies. Based on these circumstances, it would’ve been very difficult for HSBC to identify that there was anything suspicious about what Mr R was doing or that he was at risk of financial harm from fraud. Even if HSBC had probed Mr R further and asked questions about how he’d found the investment and what he’d done to research the investment, it’s unlikely that this would’ve resulted in Mr R not going ahead with the payments. I accept there were some common hallmarks of an investment scam, such as the unsolicited initial contact from Mr M, that Mr R was encouraged to increase his investment capital to maximise his profits and that his communication with Mr M was through instant messaging, rather than a more formal method. However, it’s possible that a legitimate financial advisor might also exhibit these types of behaviour and so alone, these aren’t enough to say HSBC ought to have been concerned by Mr R’s payments. And Mr R sincerely believed he was dealing with Mr M, who appeared to be a legitimate and well-known investment fund manager, with an investment firm that was regulated by the FCA. So, any warnings about dealing with unrelated advisers would not have been likely to resonate with Mr R. I also don’t think ‘Pump and Dump’ schemes were so well known at the time that HSBC could reasonably have been expected to have provided any warnings specifically about that issue, because this wasn’t a common method of fraud. So, in the circumstances, I don’t think HSBC would’ve been concerned that Mr R was at significant risk of financial harm from fraud or that it could’ve persuaded Mr R not to go ahead with the payments. I acknowledge what Mr R has sad about his vulnerabilities at the time, and I don’t doubt this impacted his decision making, but I’ve not seen anything to show that HSBC was aware of his circumstances. And so, Mr R’s vulnerability would only be a relevant factor when considering reimbursement if these payments were covered by the reimbursement rules. And, as I have explained, they are not. Mr R’s payments all went to his own trading account with W and he was able to withdraw the remaining funds. As the other funds had been used by Mr R to buy stocks (the value of which had plummeted) there was nothing HSBC could’ve done to recover his outstanding loss once it became aware of the situation. I have natural sympathy with Mr R, given the loss he’s suffered and the impact this has had on his financial circumstances. I also appreciate he feels very strongly that HSBC should be required to refund him. However, I’m not satisfied HSBC could’ve reasonably been expected to prevent Mr R’s loss here, and there wasn’t anything it could’ve done to retrieve his loss from W. So, with this in mind, I’m not persuaded it can be fairly held responsible for reimbursing him in the circumstances. My final decision I do not uphold this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr R to accept or reject my decision before 28 April 2026. Sophie Mitchell Ombudsman

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