Lloyds Bank PLC · DRN-6191905

The complaint Mr M complains that Lloyds Bank PLC won’t refund the money he lost as a result of an investment scam. Mr M is represented in this complaint, but I’ll refer to him as it’s his complaint. What happened The detailed background to this complaint is well known to both parties. Mr M was in contact with a trusted investment broker who he’d been using since 2014. The broker introduced him to an investment with Company G in which he believed his capital would be safe as it was secured against overseas assets. This was for fixed term bonds where he would get dividends on his investment and the capital would be returned after three years. Mr M made the following two payments from his Lloyds bank account: Payment Number Date Payment method Payee Amount 1 22 March 2017 Faster payment Company GF £10,000 2 12 October 2018 Faster payment Company GG £10,000 Total £20,000 Mr M received dividends on payment 1 as expected and this led to his second payment eighteen months later. When Mr M’s first bond was approaching maturity, he contacted Company G but they informed of cash flow problems stemming from the Covid pandemic and offered to extend the bond by an additional year. After receiving a letter informing him of bond issues, Mr M’s dividends suddenly stopped in 2019. And later Company G went into liquidation. Mr M believes the investment had been a scam from the start and in 2025 he submitted a complaint to Lloyds seeking a £20,000 refund and £1,000 compensation. This is because he believes that when the payment instructions were given there was an identifiable APP scam risk in response to which Lloyds failed to take the specific steps required of them under the CRM code. He also pointed out that he was inexperienced and therefore should’ve been considered vulnerable and, also under the code, Lloyds should’ve put additional measures in place to protect him. Lloyds rejected Mr M’s complaint pointing out that they considered it to be a civil dispute rather than a scam. Also, they added that CRM code didn’t come into place until 2019 which is after he made the payments. Mr M escalated his complaint to our investigator. Although our investigator, upon receipt of further information, considered that it was likely Mr M was scammed he said he wouldn’t

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have expected Lloyds to have intervened on the payments. Also, he didn’t think an intervention would’ve prevented Mr M making the payments. As Mr M disagrees and thinks our investigator didn’t consider whether Lloyds had acted reasonably in light of the risk indicators present at the time of the payments, his complaint has been passed to me to consider and make a final decision. 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. Having done so, I’m not upholding the complaint, for the same reasons given by the last investigator. I appreciate that will come as a great disappointment to Mr M, who has unfortunately lost a lot of money to what appears to have been a business established to defraud him and other investors, and I have a great deal of sympathy for what Mr M’s been put through. But, on balance, I can’t fairly say Lloyds should be held responsible for his financial loss. That’s because I don’t consider the bank would reasonably have been expected to intervene on either payment and, even if they had, I’m not persuaded they would’ve been able to uncover that the investment was a scam and prevented the two payments. I’ve explained why below. Although there isn’t any dispute that the payments weren’t authorised, it’s worth noting that the disputed transaction in this case unfortunately pre-date the introduction of the Contingent Reimbursement Model (CRM) in 2019, a voluntary scheme, where the signatory banks would refund scam payments in certain scenarios. While that’s the starting position, I’ve taken into account the regulator’s rules and guidance; relevant codes of practice, along with what I consider having been good industry practice in 2017 and 2018, which was prior to increasing expectations on banks resulting in their guidance increasing. That means I consider Lloyds should fairly and reasonably have been on the lookout for the possibility of Authorised Push Payment fraud at the time, and intervened if there were clear indications its customer might be at risk. Lloyds has a difficult balance to strike in how it configures its systems to detect unusual activity indicative of a higher risk of fraud. There are millions of payments made each day, so it would not be possible or reasonable to expect Lloyds (or any business) to check each one. In situations where Lloyds does decide to carry out further checks, I would expect that intervention to be proportionate to the circumstances of the payment. The first question for me to decide is whether the disputed transactions ought to have looked concerning enough to have prompted fraud checks. Having looked at the payments I don’t think they looked concerning enough to indicate that Mr M was at risk of financial harm and to require an intervention by a fraud and scam agent. I say this because: For payment 1, Lloyds could see and have a certain level of comfort that: • The Company GF account being credited was to a UK regulated bank that would’ve undertaken a level of due diligence. • Mr M had a recent history of making high value payments having paid businesses £13,349 and £22,429 in months that preceded the payment. For payment 2, Lloyds could see and have a certain level of comfort that: • The Company GG account being credited was to a UK regulated bank that would’ve undertaken a level of due diligence.

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• Mr M had a history of making such high value payments including to a company that appeared to be connected and for which Mr M had been receiving dividends for some time. So, I don’t think it’s reasonable for me to consider that the payments should’ve been stopped and questioned by Lloyds. Although I wouldn’t have expected an intervention, as Lloyds’ records indicate there may have been a conversation with the branch manager for one or both payments, I considered what would’ve likely happened if Mr M was asked probing questions about his intended investment or educational information about investment fraud or scams. For the following reasons, I’m not persuaded that Mr M wouldn’t have still gone ahead as: • He had a trusted broker. • The broker appears to have done some research and made a recommendation. • Mr M appears to have had investment certification and communications. • The company was listed on Companies House. • There was no information available at the time both payments were made, to indicate that the payments were being made as part of a fraud or scam. • After payment 1 Mr M consistently received dividends. Also, there is no evidence that Lloyds were aware of any vulnerabilities so they could discuss potential banking risks and mitigation. And it isn’t the role of Lloyds to give investment advice on products that are not their own or make investment recommendations. So, although I’m genuinely very sorry to hear about Mr M’s financial loss, I don’t hold Lloyds liable to refund any money. And I can’t see that they have made any errors requiring them to pay compensation. Finally, regarding recovery, whilst I recognise difficulties evidencing this scam, as Mr M raised his concerns with Lloyds several years after the company went into liquidation, I wouldn’t have expected them to be able to help recover his funds. Whilst I recognise the impact the fraud will have had on Mr M and I’m sorry to disappoint him, I just can’t fairly say that Lloyds ought to have prevented his loss here. My final decision For the reasons mentioned above, my final decision is not to uphold this complaint against Lloyds Bank Plc. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr M to accept or reject my decision before 20 April 2026. Paul Douglas Ombudsman

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