HSBC UK Bank Plc · DRN-6022991

The complaint Miss O complains HSBC UK Bank Plc (“HSBC”) declined to reimburse her £20,000 which she says she lost to an investment scam. What happened In early 2022, Miss O was informed about an investment opportunity by a family member with a company I will refer to as “V”. Miss O was told that if she invested her money with V she could make significant profits. Interested, Miss O spoke with her uncle and some other investors who appeared to have successful investments documented on a convincing looking investment platform. Miss O also received a professional looking brochure in relation to V. Miss O decided to invest and transferred £20,000 from her HSBC account to a personal account held by one of V’s directors. However, Miss O didn’t receive any returns in relation to her investment and sometime later, she was told that the FCA had started an investigation into V and halted all its activities. On 4 June 2025, Miss O raised a scam claim with HSBC but HSBC declined to refund her the amount lost. It said it was waiting for industry guidance as to whether Miss O’s circumstances could be treated as an APP scam. Unhappy with HSBC’s response, Miss O referred her complaint to our service and one of our investigators looked into things. The investigator thought it was more likely than not that V was operating a scam and that it was reasonable to reach this conclusion ahead of law enforcement and the FCA completing their investigations it to the activities of V. They therefore assessed the complaint under the Lending Standards Board’s Contingent Reimbursement Model (“CRM”) Code and said they didn’t think any of the exceptions to reimbursement as set out in The Code could fairly be applied to Miss O’s circumstances. They therefore recommended a full refund of the £20,000 lost from Miss O’s HSBC account alongside 8% simple interest from the date they issued their view on the complaint. Miss O accepted the investigators findings but HSBC did not. It reiterated the complaint should be held under R3(1)(c) of the CRM Code, as there was an ongoing investigation into V’s activities being carried out by law enforcement and the FCA. It therefore felt our service should wait until the investigations being carried out were concluded before considering the merits of Miss O’s complaint. As an informal agreement could not be reached, the complaint has been passed to me for a final decision.

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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 agree with the outcome reached by the investigator, for the same reasons. I’ll explain why in more detail below. Is it appropriate to determine Miss O’s complaint now? I understand that investigations into V’s activities are still ongoing. So, I have considered whether it would be appropriate to delay my decision as a result of the ongoing investigations – in the interests of fairness to all parties. There may be circumstances and cases where it’s appropriate to wait for the outcome of external investigations and/or related court cases. But that isn’t necessarily so in every case, as it may be possible to reach conclusions on the main issues based on evidence already available. And it may be that investigations or proceedings aren’t looking at quite the same issues or doing so in the most helpful way. In order to determine Miss O’s complaint, I have to ask myself whether, on the balance of probabilities, the available evidence indicates that it’s more likely than not that Miss O was the victim of a scam rather than a failed investment. But I wouldn’t proceed to that determination if I consider fairness to the parties demands that I delay doing so. I’m aware that Miss O first raised their claim with HSBC in June 2025, and I need to bear in mind that this service is required to determine complaints quickly and with minimum formality. With that in mind, I don’t think delaying giving Miss O an answer for an unspecified length of time would be appropriate unless truly justified. So, unless a postponement is likely to help significantly when it comes to deciding the issues, bearing in mind the evidence already available to me, I’d not be inclined to think it fair to put off the resolution of the complaint. I’m also aware the processes involved with the FCA investigation might result in some recoveries for V’s investors. To avoid the risk of double recovery, I think HSBC would be entitled to take, if it wishes, an assignment of the rights to all future distributions to Miss O under those processes in respect of her £20,000 investment before paying anything I might award to her on this complaint. For the reasons I discuss further below, I don’t think it’s necessary to wait until the outcome of the ongoing external investigations for me to fairly reach a decision on whether HSBC should reimburse Miss O under the provisions of the CRM Code. Has Miss O been the victim of an APP scam, as defined in the CRM Code? It isn’t in dispute that Miss O authorised the payment under discussion here. Because of this the starting position – in line with the Payment Services Regulations 2017 – is that she is liable for the transaction in the first instance. However, that isn’t the end of the story. HSBC has signed up to the voluntary CRM Code, which provides additional protection to scam victims. Under the CRM Code, the starting principle is that a firm should reimburse a customer who is the victim of an APP scam (except in limited circumstances). But the CRM Code only applies if the definition of an APP scam, as set out in it, is met. I have set this definition out below:

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“...a transfer of funds executed across Faster Payments…where: (i) The Customer intended to transfer funds to another person, but was instead deceived into transferring the funds to a different person; or (ii) The Customer transferred funds to another person for what they believed were legitimate purposes but which were in fact fraudulent.” The CRM Code is also explicit that it doesn’t apply to private civil disputes. The wording in The Code is as follows: “This Code does not apply to: b) private civil disputes, such as where a Customer has paid a legitimate supplier for goods, services, or digital content but has not received them, they are defective in some way, or the Customer is otherwise dissatisfied with the supplier.” I’ve therefore considered whether Miss O’s circumstances meet the definition of an APP scam as set in the CRM Code above. Having done so, I think that they do. I’ll explain why in more detail. This service is now aware of a number of issues related to V which suggest it is more likely than not that it was operating as a scam: • V’s claims of it being (at least) in the process of being regulated with relevant bodies such as the FCA in the UK and the CSSF in Luxembourg are false. • There is no evidence to substantiate V’s claims around the profits it says it was able to generate via Forex trading. • It appears that less than half of the funds sent by potential investors to the scheme were used for the intended purpose of Forex trading. Whereas it was Miss O’s understanding that her funds would be moved to a trading account to be used in Forex trading straightaway. • V’s account provider has shown that when V applied for accounts it lied at least twice, this was about partnering with a trading exchange and that it was regulated. • We have also seen evidence that none of the funds sent to V’s business accounts were used for the intended purpose of trading in Forex. Considering all of the above, I do not think V was using investor funds, such as Miss O’s £20,000, for the purpose they were intended for. And I think this difference in purpose is down to dishonest deception on V’s part. It follows that I think this complaint meets the definition of an APP scam as set out in the CRM Code above. So, now returning to the question of whether in fairness I should delay reaching a decision pending developments from external investigations, I have explained why I should only postpone a decision if I take the view that fairness to all parties demands that I should do so. In view of the evidence already available to me as set out above, I don’t consider it likely that postponing my decision would help significantly in deciding the issues. Regarding, the investigations, there is no certainty as to what, if any, prosecutions may be brought in future, nor what, if any, new light they would shed on the evidence and issues I’ve discussed here. Furthermore, HSBC hasn’t provided an explanation why awaiting the outcome of any external investigations would reasonably inform an outcome under the CRM Code. The investigation and potential decision to charge will be based on a criminal burden of proof. That may well take many months or years to decide or may not happen at all.

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In this case I’m deciding if HSBC, under the voluntary CRM Code, is liable to refund the consumer where it’s more likely than not, that the consumer was the victim of an APP scam. I appreciate a law enforcement investigation may reveal more detail but as I’m of the opinion that it is not in question that this was a scam, then that isn’t necessary in this particular instance. There is enough evidence here that on balance Miss O more was more likely than not the victim of an APP scam. Is Miss O entitled to reimbursement under the CRM Code? I’ve then gone on to consider whether HSBC should refund Miss O under the provisions of the CRM Code. There are generally two exceptions to reimbursement within the Code: • Miss O ignored an ‘Effective Warning’ • Miss O made the payments without a reasonable basis for believing that they were for genuine goods or services; and/or V was legitimate. HSBC has said it did provide Miss O with an effective warning at the time this payment was made. However, I’m not persuaded this warning can be considered effective under the provisions of the CRM Code. I say this because it is lengthy and attempts to cover the key characteristics of a number of different scams which ultimately makes it less impactful. It also fails to explain the role of the Financial Conduct Authority (“FCA) and the importance of checking that the customer is dealing with a regulated firm. So, whilst I acknowledge that in this case HSBC did attempt to provide Miss O with an effective scam warning and that parts of the warning were applicable to the situation Miss O found herself in. Overall, I’m not persuaded that the warning would’ve been impactful enough to have resonated with Miss O. This means HSBC hasn’t demonstrated Miss O ignored an effective scam warning for the purposes of the CRM Code. So, there is no exception to full reimbursement in relation to this point. I have then considered whether Miss O had a reasonable basis to believe V was legitimate and were providing a genuine investment product at the time she made this payment. In doing so, I have taken into account that Miss O was had: • Spoken with one of V’s directors who had been able to speak at length about the investment and how it worked. • Viewed other family members’ investment platforms that appeared to show their investments doing well and as set out by V’s directors. • Received professional and convincing product literature in relation to the investment. • Viewed a professional looking website and had access to an online portal that looked to be genuine. I acknowledge HSBCs arguments that the returns promised to Miss O, in this case 200%, should have been a red flag. However, in the particular circumstances of this case, I’m not persuaded that the high rate of return being offered is enough to undermine all of the other circumstances that had persuaded Miss O that the investment was legitimate to the point where I can now fairly say that Miss O didn’t have a reasonable basis of belief – especially given that it’s unclear over what period these returns were expected to accrue. Furthermore, HSBC is still of the opinion that this may be a legitimate failed investment. This is why it has requested that this service delay giving an outcome on Miss O’s complaint until all external investigations into the activities of V have been concluded. So, it wouldn’t be reasonable for me to now conclude that a layperson, such as Miss O, should’ve been able to

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readily identify this as an APP scam as early as 2022 and that this this should have been so obvious to her at the time, that she had no reasonable basis for believing the investment was legitimate. HSBC, as the industry expert, is still unsure of this conclusion a number of years later when much more information about V has become available. So, overall, whilst I have carefully considered the high levels of returns promised (and guaranteed) in this case and whilst I understand why HSBC are concerned about this, I still think the way the scam was presented at time was enough to reasonably convince Miss O that this was a genuine investment she could trust. With this in mind, I don’t think Miss O made her payment without a reasonable basis of belief that V and the investment itself was genuine. I therefore do not think HSBC can apply an exception to reimbursement, so it should reimburse Miss O in full. Putting things right HSBC should reimburse Miss O the £20,000 she lost to this investment scam. HSBC should also apply 8% simple interest from the date of the investigator’s view to the date of settlement.* I say this because the information our service has relied upon to uphold Miss O’s complaint may not have been readily available to HSBC when the scam claim was first raised. *If HSBC considers that it’s required by HM Revenue & Customs to deduct income tax from that interest, it should tell Miss O how much it’s taken off. It should also give her a tax deduction certificate if she asks for one, so she can reclaim the tax from HM Revenue & Customs if appropriate. My final decision For the reasons given above, I uphold this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Miss O to accept or reject my decision before 28 April 2026. Emly Hanley Hayes Ombudsman

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