Lloyds Bank PLC · DRN-5957196

The complaint Ms A complains that Lloyds Bank PLC (“Lloyds”) won’t refund her money, which she believes she has lost to a scam. What happened The background to this complaint is well known to all parties, so I won’t repeat it in detail here. But in summary, I understand it to be as follows. In or around May 2025, Ms A was looking to have some building work carried out on her home. She contacted a builder, who I’ll refer to as “M”, who had been recommended to her. M visited Ms A’s property and provided a quotation. Ms A has explained that she also got quotes from some other builders but agreed for M to carry out the work. It was agreed that work would commence on 12 May 2025 and take around two weeks to complete. Satisfied with what had been agreed, on 6 May 2025, Ms A went ahead and made a payment to M for £1,700 from the account she holds with Lloyds. However, Ms A has said no works were carried out and no materials have been delivered. Ms A has said M told her another job had over run, that he was unwell and that he would start the work in August. But she’s said M never started the work and when she arranged to have the materials, that she’d paid for, picked up from M, they didn’t provide them. Believing she’d fallen victim to a scam, Ms A raised the matter with Lloyds, but it did not consider it was liable for Ms A’s loss. In summary, this was because it thought what had happened was a civil matter. Lloyds did recognise the service it offered could have been better, in recognition of this it paid Ms A £50 by way of compensation. Unhappy with Lloyds’ response, Ms A brought her complaint to this service. One of our Investigators looked into things. But they agreed with Lloyds, that this was most likely a civil dispute, and so Ms A was not entitled to a refund of the payment she had made. Ms A didn’t agree with our Investigator’s view, she maintained that what had happened was a scam. As agreement couldn’t be reached, the complaint has been passed to me for 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. I’m very aware that I’ve summarised this complaint briefly, in less detail than has been provided, and in my own words. No discourtesy is intended by this. Instead, I’ve focussed on what I think is the heart of the matter here. If there’s something I’ve not mentioned, it isn’t because I’ve ignored it. I haven’t. I’m satisfied I don’t need to comment on every individual point or argument to be able to reach what I think is the right outcome. Our rules allow me to

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do this. This simply reflects the informal nature of our service as a free alternative to the courts. In her submissions Ms A has raised complaint points within her arguments that relate to the beneficiary bank (the bank to which the money was sent), which was not Lloyds. At the outset, I should make it clear that this decision solely focuses on Lloyds, in its capacity as the sending bank. Having thought very carefully about Lloyds’ actions, I agree with the findings set out by our Investigator. I do appreciate how disappointing this will be for Ms A but, whilst I’m sorry to hear of what’s happened, I don’t think I can fairly hold Lloyds liable for her loss. When considering what is fair and reasonable in this case, I’ve thought about the relevant rules that were in place at the time the disputed payment was made. From 7 October 2024, Payment Services Providers in the UK, like Lloyds, have been bound by the Faster Payments Scheme (FPS) and the CHAPS reimbursement rules (“Reimbursement Rules”). Under these rules, most victims of Authorised Push Payment (APP) scams should be reimbursed – but “private civil disputes” are not covered. I’ve therefore considered whether what has happened between Ms A and M meets the Reimbursement Rules’ definition of an APP scam or could more reasonably be classed as a civil dispute. The Reimbursement Rules define an APP Scam as: “Where a person uses a fraudulent or dishonest act or course of conduct to manipulate, deceive or persuade a consumer into transferring funds from the consumer’s relevant account to a relevant account not controlled by the consumer, where: • The recipient is not who the consumer intended to pay, or • The payment is not for the purpose the consumer intended” By contrast, a private civil dispute is defined as; “A dispute between a consumer and payee which is a private matter between them for resolution in the civil courts, rather than involving criminal fraud or dishonesty”. In its published policy statement PS23/3, the Payment Systems Regulator gave further guidance: “2.6 Civil disputes do not meet our definition of an APP fraud as the customer has not been deceived […] The law protects consumer rights when purchasing goods and services, including through the Consumer Rights Act.” 2.5 provides an example of when this might apply: “…such as where a customer has paid a legitimate supplier for goods or services but has not received them, they are defective in some way, or the customer is otherwise dissatisfied with the supplier.” So, in order to consider what has happened here as an APP scam, I would need to be satisfied that it involves criminal deception. The evidence for this would therefore need to be convincing. Having thought about this carefully, I’m not satisfied that the Reimbursement Rules cover Ms A’s payment. I’ll explain why.

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There is no dispute here that Ms A paid the person she intended on paying, M, so the first part of the APP scam definition doesn’t apply here. I’ve therefore gone on to consider whether, as a result of dishonesty, the payment was made for a purpose other than Ms A intended. The threshold for establishing fraud is a high one. Although this service applies the civil standard of proof (meaning I must decide what is more likely than not) fraud cannot be found lightly. It is not enough that fraud is a possible or even persuasive explanation, nor that it is the most likely of several explanations. I’d need to see convincing evidence to show fraud is the most likely explanation over any other possibility. It must be more probable than the alternative conclusion: that no fraud occurred. Simply failing to provide an item or service that has been paid for won’t be enough to show that what happened was an APP scam. That’s because the key issue is whether M’s intention at the time of the payment was to defraud Ms A, and any other reasons for M not carrying out the work/not delivering the materials might not mean that was always what had been intended. Here, the purpose of the payment was to complete building work. While I appreciate that Ms A has said that the work wasn’t carried out and no materials were delivered, it is clear from the evidence that M attended Ms A’s property and provided a quote. While this doesn’t of course rule out the possibility that a fraud has taken place, it equally supports the notion that M didn’t deceive Ms A about the very purpose of the payment (that being for the provision of building work/materials). As well as this, and as mentioned above, Ms A has said that M had been recommended to her by somebody who had vouched for M’s workmanship. While this, of course, doesn’t rule out the possibility that M could later go on to commit a fraud, I find it more compellingly demonstrates that M had provided similar services satisfactorily before. While I accept that not completing work and not delivering materials are behaviours that could potentially be hallmarks of a scam, there are other possible reasons for them being present. I need to weigh up what I think is more likely than not to have happened here and whether M set out to defraud Ms A. Of course, I can’t know for sure what was intended, particularly in the absence of any direct contact and testimony from the third party involved – M. I don’t have the power to compel evidence from M (unlike say the police or Trading Standards). Instead, I need to make my decision based on the evidence that is actually available to me and considering whether I think that evidence shows fraud is the most likely of the possible outcomes (in other words, applying the balance of probabilities). Ms A has said she received a number of excuses from M in relation to the agreed work start dates, including that another job had over run and that they were unwell. While these may have been excuses and lies, they may also have been legitimate reasons for the delay in the commencement of the works. Though I accept it’s frustrating when works don’t go to plan. Unfortunately, this is a common feature even in legitimate building arrangements. Alongside this, while I can’t go into specific details due to data protection reasons, information I’ve seen from the beneficiary bank supports that M didn’t have a different intention for the money that was received. The beneficiary bank has said it doesn’t have any concerns about how the account was being operated. I’m also aware that there had been no other concerns raised about the activity on the beneficiary account. Typically, if somebody were running a fraud, you’d expect to see other concerns raised – but that isn’t the case here.

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Ms A has raised that M doesn’t appear to be a registered company, that the address she was given for M is not related to the individual, and that she has had some post returned. However, I’m not persuaded this, in and of itself, would reasonably lead to a conclusion that a fraud has been committed. It doesn’t appear that M is a limited company, so it may well be they are a sole trader. What this means is that there wouldn’t have been any requirement for M to be registered with Companies House. And companies/traders often have different addresses (such as for accountancy purposes) and there is of course the possibility that M has moved. I understand that Ms A reported the matter to Action Fraud. But I’ve not seen any evidence to suggest that any substantive lines of enquiry are being pursued against M, nor that any charges have been brought. While I’m mindful it isn’t necessary for a criminal conviction to have been secured or for charges to have been brought for what happened here to meet the Reimbursement Rules definition of an APP scam - the fact that the relevant authorities appear not to be pursuing a substantive investigation into the allegations raised by Ms A suggests to me that the evidence presented does not, on its own, currently carry sufficient weight to support a finding of fraud. I acknowledge that Ms A did not ultimately receive what she had paid for, but there are many reasons, other than fraud, why a trader may fail to meet their commitments. They may act unprofessionally, may get into financial or personal difficulties and work may be completed to a poor standard. But it doesn’t automatically follow that this demonstrates an intent to defraud. I’m mindful that Ms A has referred to her rights under the Consumer Rights Act 2015 (CRA 2015). However, the CRA 2015 implies terms with the provider of the service, in this case M. If the materials had been bought on credit, then Ms A may have had some protection via the lender. But in the individual circumstances of this case, Lloyds has no obligations in respect of any potential breach of contract by M. Should Ms A wish to pursue a claim, under CRA 2015 considerations, this would have to be against M, rather than Lloyds. I don’t intend any comments or findings I’ve made in this decision to downplay or diminish the impact these matters have had on Ms A. I have a great deal of sympathy for her, and I don’t doubt that she has been let down and that she has a genuine grievance against M. But in the circumstances, having carefully considered everything, I don’t find Lloyds were wrong to decline Ms A’s claim when considering the Reimbursement Rules. Neither do I find there were any other failings on Lloyds’s part that would lead me to uphold this complaint. My final decision My final decision is that I don’t uphold this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Ms A to accept or reject my decision before 28 April 2026. Stephen Wise Ombudsman

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