FOS Instructs Santander to
Reimburse Investment Fraud Victim

Ms G was called by a ‘Financial Consultant’, persuading her to invest in an ISA wrapped bond, promising a 9% return on interest annually.

Ms G made two payments, amounting to a total of £13,000. She initially appeared to have received returns of £1,064.45, however was unable to access any of the money. Becoming alarmed, Ms G suspected that she had become a victim of an investment scam. Following standard advice, she contacted her bank immediately.

Since the scam, the investment company that approached Ms G has been shut down by the Insolvency Service after misleading investors and failing to cooperate in investigations into its affairs.

Santander advised Ms G that they had no reason to question the payments she made at the time they happened. They also advised that they did not consider this case was a Push Payment (APP) fraud matter as they could not identify any social engineering involved. Because of this, Santander instead labelled this as a ‘civil dispute’. The case put Santander under further scrutiny following a string of upheld APP Fraud claims.

Ms G’s case was taken to the Financial Ombudsman Service (FOS) for an impartial review, and to reach a final decision. FOS is an independent, government-backed authority which deals with financial disputes between individuals and financial institutions.

Following its investigation, FOS was satisfied that Ms G had in fact been the victim of APP fraud, in the form of an investment scam, given the evidence that the Director of the company she had engaged with had been disqualified as a Director on Companies House by the Secretary of State. Furthermore, City watchdog, the Financial Conduct Authority (FCA) had also issued a warning about a linked company.

The FOS investigation highlighted no evidence to suggest the company Ms G had engaged with was carrying the investments they claimed to be. Therefore, FOS considered this to be a case of APP fraud under the definitions set out by the Contingent Reimbursement Model (CRM) code.

Santander was ordered to refund Ms S the total amount she lost in the scam (£11,925.55), plus interest at 8%.

Authorised Push Payment fraud (APP fraud) involves social engineering tactics to trick victims into transferring money to scammers. There are various types of scams that can occur under the umbrella of APP fraud, such as romance scams, investment scams, impersonation scams and crypto scams.

Scammers can pose as anybody in a position of trust, such as a policeman, accountant, or a friend or romantic partner. Scammers can use pressure tactics, fear mongering and even threats to manipulate victims into transferring money.

If you think you have been scammed, it is essential to notify the police and your bank as soon as possible. You can also report any suspected scamming activity to Action Fraud, the National Fraud and Cyber Crime Reporting Centre, to prevent the same thing happening to other people.

Your bank will then investigate the activity and advise whether you are eligible for a refund. Since October 7th, 2024, the FCA has introduced a mandatory reimbursement scheme, which means that all regulated financial institutions are required to refund money lost to APP scams within five working days. However, if you were scammed before this date, you will not be covered by FCA’s latest mandate.

If you believe you have been a victim of APP fraud, and your bank disputes your claim or you disagree with their findings, you may be able to take your claim to FOS.

Sarah Spruce, Legal Director, commented on the FOS decision:

“It is interesting to read FOS’ final decision in Ms G’s case which highlights the need for financial institutions to step up when their customers are affected by APP fraud.

It was clear following the investigation that the company providing investment advice to Ms G was not legitimate and has since been closed by the Insolvency Service. Santander could not offer any evidence to the contrary, and so this claim was upheld as a clear APP fraud case.

We welcome the introduction in October 2024 of the mandatory reimbursement scheme which now requires all financial institutions to refund money lost to APP scams. If you have been affected by fraudulent activity, don’t be embarrassed or ashamed to come forward. You are not alone, and as further robust measures are put into place within the financial services industry to protect victims of fraud, more and more help is available for victims of unscrupulous scammers.

If you have lost out to fraudsters – get in touch with my specialist team for a confidential and no obligation discussion to see if you may be eligible to make a ‘no-win, no-fee’ refund claim.”