HSBC UK Bank Plc · DRN-6191250

The complaint Mr D complains that HSBC UK Bank Plc hasn’t refunded the money he lost when he invested in what he now believes may have been an investment scam. What happened Mr D holds a foreign currency account with HSBC. Between in April 2019, he sent two payments from his HSBC account to a property development investment scheme. These payments totalled €115,000. The investment was not repaid on schedule, and Mr D has learned that the company (and the wider group it apparently was part of) has entered administration. It appears unsecured creditors such as Mr D are unlikely to be repaid. The money Mr D invested appears to have been lost. Mr D reported this as an Authorised Push Payment Scam (APP scam) to HSBC. HSBC didn’t accept it was liable to refund Mr D for the money he’d lost. It noted that Mr D had authorised the payments and it had followed his instructions. There had been no reason for HSBC not to do so. Furthermore, HSBC considered this had been a failed investment rather than an APP scam. Mr D didn’t accept this outcome. He referred his complaint about HSBC to this service for an independent review. Our Investigator looked into the matter. However, she didn’t think HSBC needed to reimburse Mr D. She said that Mr D’s payment instructions ought to have prompted HSBC to contact Mr D prior to processing them. But she said that even had HSBC done so, this would not have prevented the payments from being made. She thought that at the time there would not have been sufficient information available about the potentially fraudulent nature of the investment to have led to the prevention of the payments Mr D had asked HSBC to make. Mr D didn’t accept the Investigator’s findings. He said: - HSBC ought to have intervened and failed to do so - The investment had clear red flags that HSBC would then have identified (including that the promised returns were high and this was an unregulated investment). The Investigator didn’t think these points changed her findings. In light of this disagreement, the complaint has been referred to me to 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. In deciding what’s fair and reasonable in all the circumstances of a complaint, I’m required to

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take into account relevant: law and regulations; regulators’ rules, guidance and standards; codes of practice; and, where appropriate, what I consider to be good industry practice at the time. Where the evidence is incomplete or missing, I am required to make my findings based on a balance of probabilities – in other words what I consider is most likely given the information available to me. In broad terms, the starting position at law is that a bank such as HSBC is expected to process payments and withdrawals that a customer authorises it to make, in accordance with the Payment Services Regulations (in this case the 2017 regulations) and the terms and conditions of the customer’s account. These payments pre-date the introduction of a voluntary scam reimbursement code – the Lending Standards Board’s Contingent Reimbursement Model Code (the ‘CRM Code’). It also only applies to transfers in pounds sterling (not in Euros). So this scheme cannot apply to Mr D’s payments. Nonetheless, taking into account longstanding regulatory expectations and requirements as well as what I consider to have been good industry practice at the time, banks should have been on the look-out for the possibility of fraud and have taken additional steps, or made additional checks, before processing payments in some circumstances. Having reviewed the first of the two payments made by Mr D in 2019, in the context of his prior account history, I’m satisfied that it is at least arguable that HSBC ought to have made some enquiries prior to processing his payment instruction. It was a larger than usual payment from this account, and being sent to a payment destination that Mr D had not previously paid. Of course, a legitimate payment could equally have been for a larger than usual sum and to a new payee – these factors need not necessarily mean a payment will result in loss to fraud or scam. I would need to find not only that HSBC failed to intervene where it ought reasonably to have done so — but crucially I’d need to find that but for this failure the subsequent loss would have been avoided. That latter element concerns causation. Specifically, I don’t consider that a proportionate intervention by a bank in relation to a payment will always have the result of preventing the payment. Nor should it. In many instances the initial concerns that prompted the intervention will appear upon enquiry to be unwarranted. And if I find it more likely than not that such a proportionate intervention by the bank wouldn’t have revealed the payment was part of a fraud or scam, then I couldn’t fairly hold the bank liable for not having prevented it from being made. To reiterate, HSBC’s primary obligation was to carry out its customer’s instructions without delay. It wasn’t to concern itself with the wisdom or risks of the customer’s payment decision. In particular, HSBC didn’t have specific obligations to step in when it received an instruction to make a payment to protect its customers from potentially risky investments. The investment in this scheme wasn’t an investment HSBC was recommending or even endorsing. Its role here was to make the payment it was instructed by Mr D to make. Mr D had already decided on that investment. Further, I find HSBC couldn’t have considered the suitability or unsuitability of a third-party investment product without itself assessing Mr D’s circumstances, investment needs and financial goals. Taking such steps to assess suitability without an explicit request from Mr D

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(which there was not here) would have gone far beyond the scope of what I could reasonably expect of HSBC in any proportionate response to a correctly authorised payment instruction (or instructions) from its customer. That said, I think it would have been proportionate here for HSBC, as a matter of good industry practice, to have taken steps to establish more information about the initial payment made by Mr D. In thinking about this, I’ve considered what a proportionate intervention by HSBC at the relevant time could reasonably uncovered, and what I consider the most likely result of such an intervention would have been. What matters here is what such steps might be expected to have uncovered at the time. I need to restrict myself to what was (or would have been) available at the time given proportionate enquiry. For instance, factors such as the later law enforcement investigation could not have been known in 2019. It doesn’t appear that there was readily accessible information online, such as a regulatory warning or negative online reviews which could have otherwise prompted concern. The returns while high appear broadly in line with the higher investment risks associated with such an investment. Businesses issuing this type of investment at the time didn’t necessarily require authorisation by the FCA. The group appears to have featured in a list of ‘inspiring companies’ in 2019, collated by the London Stock Exchange and seemingly endorsed by senior politicians. Several large-scale redevelopment projects appear to have been undertaken by the group (and, at least in some instances, completed) by the date Mr D invested. Some investors appear to have received what they had expected. The group itself appears to have operated for more than five years prior to Mr D’s investment. Simply put, even had HSBC spoken to Mr D about the payments at the time he was making them, I am not persuaded either he or HSBC would have identified any valid reasons not to proceed. So even were I to find HSBC at fault through not having carried out a proportionate intervention, I find there is no causative link to the ultimate loss of Mr D’s capital. Could any funds have been recovered? Even if HSBC had concluded this was an APP Scam at the point Mr D later reported the payments and his reasons for believing it to be a scam, there was no prospect of HSBC being able to recover his funds from the beneficiary account. The investment scheme had already entered administration. To summarise then, I cannot fairly require HSBC to reimburse Mr D. I appreciate this will be a disappointment to Mr D. He lost a considerable sum to this investment, and I do not underestimate the impact this has had on him. But I don’t find that was due to fault on HSBC’s part or that it is otherwise required to refund Mr D. My final decision For the reasons given above, I do not uphold Mr D’s complaint about HSBC UK Bank Plc.

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Under the rules of the Financial Ombudsman Service, I’m required to ask Mr D to accept or reject my decision before 28 April 2026. Stephen Dickie Ombudsman

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