Lloyds Bank PLC · DRN-6147504

The complaint Mr and Mrs W complain that Lloyds Bank PLC won’t reimburse the money they say they’ve lost to a scam. What happened Mr and Mrs W employed a person I’ll refer to as ‘D’ to renovate a property they’d purchased. They made payments to D for the works from their Lloyds account in May 2023. Mr and Mrs W say that some work they paid D to do was finished to a satisfactory standard, but D did not complete all of the work and some of the work they did was substandard. Mr and Mrs W believe they have been scammed. They raised a fraud claim with Lloyds in November 2025. Lloyds declined to reimburse them under the provisions of the Lending Standards Board’s Contingent Reimbursement Model (‘CRM Code’) because it believes this is a civil matter between Mr and Mrs W and D. Mr and Mrs W referred a complaint to this Service which our investigator considered but didn’t uphold. He said he believes this matter is a civil dispute between Mr and Mrs W and D. Mr and Mrs W asked for an ombudsman’s final decision, so their complaint has now been passed to me to decide. 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, I’m required to take into account relevant law and regulations; regulator’s rules, guidance and standards; codes of practice; and, where appropriate, what I consider to have been good industry practice at the time. Having looked at everything, I can see no basis on which I can fairly require Lloyds to refund the financial loss Mr and Mrs W claim. I appreciate that this isn’t the outcome Mr and Mrs W will be hoping for, but I’ll explain my reasoning below. In broad terms, the starting position at law is that a firm is expected to process payments and withdrawals that its customer authorises, in accordance with the Payment Services Regulations and the terms and conditions of the customer’s account. When Lloyds processed the disputed payments, it was complying with Mr and Mrs W’s instructions. At the time, Mr and Mrs W wanted to pay D and there was no mistake made as their money was sent to the correct account details. As I don’t think Lloyds acted incorrectly by making the disputed payments, I’ve gone on to consider whether the bank should’ve refunded Mr and Mrs W for any other reason, but I don’t think it ought to have. Lloyds was signed up to the CRM Code, and it was in force when Mr and Mrs W made the disputed payments. Under the CRM Code, the starting principle is that a firm should

-- 1 of 3 --

reimburse a customer who has been the victim of an Authorised Push Payment (‘APP’) scam. The relevant definition of a scam from the CRM Code is that a customer transferred funds to another person for what they believed were legitimate purposes, but which were in fact fraudulent. The CRM Code is quite explicit that it doesn’t apply to all APPs. It says: “DS2(2) 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.” So, in order to determine whether Mr and Mrs W have been the victims of a scam as defined in the CRM Code, I need to consider whether the purpose they intended for the disputed payments was legitimate, whether the payment purposes Mr and Mrs W and D intended were broadly aligned, and then, if they weren’t, whether this was the result of a dishonest deception on the part of D. From what I’ve seen and what Mr and Mrs W have told us, I’m satisfied they made the disputed payments for renovation works, and I haven’t seen anything to suggest that they didn’t believe in D’s legitimacy at the time. But I’m not satisfied the evidence I’ve seen suggests that D intended a different purpose for the disputed payments received from Mr and Mrs W, or that Mr and Mrs W’s and D’s purposes for the relevant payments weren’t broadly aligned. I say this because: • D attended Mr and Mrs W’s property on many occasions and progressed the renovation works over a protracted period. Mr and Mrs W have confirmed that some of the work they paid for has been completed to a satisfactory standard, and some other work has been completed, albeit to an unsatisfactory standard. This would all be unusual in the case of fraud – scammers usually attend sites so that victims remain ‘under their spell’ and continue to hand over money when it is repeatedly requested to fix new problems that have arisen, but little to no work is done to any standard. • I haven’t been provided with any independent reports confirming that some of the work D has completed is of an unsatisfactory standard. • I’ve seen evidence of D using Mr and Mrs W’s money to purchase the materials required for the renovation works. • The banking evidence I’ve seen indicates that D is/was operating in the building trade. • Both parties have initiated civil court proceedings, and I think it would be highly unusual for a fraudster to take legal action to receive payment for services allegedly provided. Overall, although I accept that Mr and Mrs W may not have received the full service they paid for, and that the service may not have been carried out to a satisfactory standard, I don’t think the available evidence indicates that they’ve fallen victim to a scam. From what I’ve seen, I think it’s most likely that Mr and Mrs W and D both intended the disputed payments for renovation works when they were made, but things have gone wrong down the line and the relationship between Mr and Mrs W and D has broken down – leading to both parties initiating civil court proceedings. I’m not persuaded there’s an indication that D set out to deceive or trick Mr and Mrs W into paying for renovation works which they had no

-- 2 of 3 --

intention of carrying out. As such, I think this matter is a civil dispute between Mr and Mrs W and D and I don’t think Lloyds is responsible for reimbursing Mr and Mrs W because of any obligation under the CRM Code. Looking beyond the CRM Code, at a firm’s responsibilities to protect customers from financial harm through fraud, I can still find no reason to say Lloyds ought to bear responsibility for Mr and Mrs W’s loss. The reasoning here is broadly the same as above, given that the disputed payments wouldn’t be defined as being made as part of an APP scam. But, beyond that, if Lloyds had intervened in the disputed payments, I’m not persuaded it would have uncovered that an APP scam was taking place considering the information that would’ve been available at the time. My final decision For the reasons I’ve explained, my final decision is that I do not uphold this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Mrs W and Mr W to accept or reject my decision before 21 April 2026. Kyley Hanson Ombudsman

-- 3 of 3 --