Lloyds Bank PLC · DRN-6207933

The complaint Mr G complains Lloyds Bank PLC won’t refund all of the money he lost to a scam. What happened The background to this complaint is well-known to both parties, so I won’t repeat it in detail here. But in summary and based on the submissions of both parties, I understand it to be as follows. Between July and December 2024, Mr G lost over £60,000 to what he thought was a legitimate cryptocurrency investment. The scammer demanded that Mr G pay taxes in order to access his funds, and when Mr G refused, his account was suspended and his funds frozen. Mr G realised he had been scammed and complained to Lloyds. Lloyds looked into the complaint and decided to refund 50% of the losses Mr G had incurred, together with interest and £100 compensation. They said they should have done more to help Mr G uncover the scam, but that he also could have done more to protect himself. Unhappy with Lloyds’s response, Mr G brought his complaint to our service. Our Investigator looked into everything but didn’t think Lloyds should refund the full amount that Mr G had lost. While they were of the view that Lloyds should have intervened when the payments were being made, they as agreed that Mr G could have done more to protect himself. Mr G didn’t agree and so the complaint has been passed to me for review. 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 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 focused 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, it’s because 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 do this as it simply reflects the informal nature of our service as a free alternative to the courts. I can confirm I have considered all guidance and areas of law that are relevant to this case, along with all documentation submitted. I don’t doubt Mr G has been the victim of a scam here – he has lost a large sum of money and has my sympathy for this given the circumstances. However, just because a scam has occurred, it does not mean that he is automatically entitled to a full refund from Lloyds. It would only be fair for me to tell them to reimburse Mr G for his loss if I thought they reasonably ought to have prevented all (or some of) the payments made, or that they hindered the recovery of them.

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I’ve thought carefully about whether Lloyds treated Mr G fairly and reasonably, both when he made the payments and when he reported the scam, or whether they should have done more than they did. Having done so, I’ve decided the 50% offered is fair. I know this will come as a disappointment to Mr G and so I want to explain why I’ve reached the decision I have. I have kept in mind that Mr G made the payments himself and the starting position is that Lloyds should follow their customer’s instructions. So, under the Payment Services Regulations 2017 (PSR 2017) he is presumed liable for the loss in the first instance. I appreciate that Mr G didn’t intend for his money to ultimately go to fraudsters – but he did authorise the payments to take place. However, there are some situations when Lloyds should have had a closer look at the wider circumstances surrounding a transaction before allowing it to be made. Taking into account the regulatory rules and guidance, relevant codes of practice and good industry practice, there are circumstances where it might be appropriate for Lloyds to take additional steps or make additional checks before processing a payment to help protect customers from the possibility of financial harm from fraud. So, the starting point here is whether the instructions given by Mr G to Lloyds (either individually or collectively) were unusual enough to have expected additional checks to be carried out before the payments were processed. From the information available, it looks as though Lloyds’s systems were triggered when the first and second payments were made and so they intervened. Mr G told Lloyds he was buying cryptocurrency after just opening an account with a cryptocurrency platform, and so Lloyds should have passed Mr G to their specialist team for further questioning, but they didn’t. Lloyds have acknowledged that they should have asked more questions about the surrounding circumstances of the payments to determine whether Mr G was falling victim to a scam. And I agree. Had they contacted him and asked further questions, it’s possible they could have stopped the scam from progressing. From what I can see, Lloyds didn’t sufficiently probe in their intervention with Mr G. Given the amount of some of the payments, and the fact they were being made to a well-known cryptocurrency platform, I believe Lloyds should have done more. The third payment was the second one made on that day to cryptocurrency and brought the total for that day up to £3,000. This was after Mr G had sent £2,000 just a few days before. There were also days where Mr G made payments for substantial amounts, with no intervention at all. I accept that Lloyds need to strike a balance between payments that pose risk, and those that are highly likely to be genuine. Millions of payments are made every day and it wouldn’t be feasible to expect a bank to stop every single one. Lloyds have processes in place to spot payments that look suspicious, and they ask questions around what the payments are being made for. They can’t be seen to interrogate a customer and will base their actions and questioning on the answers they are given. But, I do agree they should have intervened when Mr G was making some of his payments to the cryptocurrency platform. Therefore, having considered everything, I agree it is fair that Lloyds refund Mr G’s losses from payment one. Lloyds accept they could have done more and have offered to reimburse 50% of Mr G’s loss, together with interest and £100 compensation. So what I need to consider is whether it was fair for the 50% deduction to be made. Despite regulatory safeguards, there is a general principle that consumers must still take responsibility for their decisions (see s.1C(d) of our enabling statute, the Financial Services

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and Markets Act 2000). In the circumstances, I do think it would be fair to apply the 50% reduction on the basis that Mr G should share blame for what happened. I say this because I have carried out a search for the firm Mr G was dealing with and found an article published by the FCA in February 2023 (before the payments were made) to say the firm was a clone and not to deal with them. This warning wasn’t difficult to find and was one of the first results when I carried out the search. Had Mr G carried out sufficient research at the time (as I think he should have when considering the value of the payments he was making), it’s most likely he would have found this. In addition to the above, I note that the communication with the scammer took place over a messaging app, which isn’t usually how a legitimate investment company would communicate with its investors. Mr G was able to communicate with other investors, which again, isn’t typical of a legitimate investment. I also can’t see that Mr G was sent any terms and conditions or formal documentation prior to investing, which should have raised some concern. I do empathise with Mr G though, as scammers can be extremely convincing and can apply pressure when encouraging someone to make payments. I don’t believe Mr G is at fault here, the scammer is. But I have to decide whether given everything, it would be fair to say that Lloyds have to refund the full amount. With everything considered, I think it would be fair to apply some responsibility to Mr G. And I think a 50% reduction to the award based on contributory negligence, in the circumstances of this complaint, is reasonable. Mr G has asked how the 50% is calculated. I’d like to explain that we base this figure on how much responsibility was held by each party. It’s not based on the amount of the payments made, or how many payments were made. In this case, Lloyds should have probed further and questioned Mr G which could have uncovered the scam, so they are responsible for not doing what they should have done. Mr G is equally responsible for the reasons I have explained above. I'd like to express that I appreciate Mr G is the innocent victim of a scam here and so I’m not trying to place blame with him. It's a cruel thing for him to have gone through and I would like to extend my deepest sympathy to him for the impact the scam has had. But while such a cruel scam has taken place, it wouldn't be fair for me to say that Lloyds should have to pay back all of the money lost, when Mr G didn’t do all he could to protect himself. Because of this, while I agree Lloyds could have done more here, I'm not able to ask them to refund all of the money lost and I believe the 50% refund is fair. I hope my explanation and reasoning have been clear. I'm really sorry Mr G has been through such an ordeal. Recovery After the payments were made, I couldn’t reasonably expect Lloyds to have done anything further until Mr G told them he had been scammed.

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As the payments were being made into cryptocurrency accounts in Mr G’s name, the funds would have been there for him to access, had any remained. I can see that Lloyds were able to recover just under £500, but nothing more. Because of the above, while I can see they tried, I’m satisfied Lloyds could not have successfully recovered any more of Mr G’s funds. The Contingent Reimbursement Model (CRM) Code Mr G has said the payments made were caught by the CRM code, however the Code does not apply in this instance. This is because the payments Mr G made were made to accounts in his name, which are not covered. So, I cannot reasonably say Lloyds have to refund any payments under the Code when it does not apply here. My final decision My final decision is that the payment made by Lloyds UK Bank Plc is a fair one and so I won’t be asking them to increase it. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr G to accept or reject my decision before 28 April 2026. Danielle Padden Ombudsman

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