Starling Bank Limited · DRN-6056145

The complaint Miss M complains that Starling Bank Limited won’t reimburse money she lost as a result of a scam. What happened Miss M had just come out of a long-term and abusive relationship. She was approached by an acquaintance she’d known for a number of years (“Mr A”) who said that he could arrange for her car to be fixed at a garage he owned with a family member. The price Mr A quoted was lower than she’d received elsewhere. Miss M agreed – she gave possession of her car, as well as a number of car parts she’d purchased for the repair to Mr A. Mr A went onto request additional sums of money for repairs he claimed were necessary and advised her against visiting the garage. In total Miss M paid Mr A a total of £8,417 from her Starling account and £1,000 in cash. Eventually Miss M visited the garage herself and found out that it wasn’t owned by Mr A, or a family member, and that no repairs had been carried out on her vehicle. She removed the vehicle from the garage and asked Mr A for a refund. But he gave excuses as to why the funds couldn’t be returned – including that he was in hospital and that his bank account had been frozen. The car parts that Miss M had given to Mr A had been given to third parties (although Miss M was eventually able to reclaim most of them). Mr A repaid £900 to Miss M after she threatened to go to the police. Miss M reported the matter to Starling, but it said that she hadn’t been involved in a scam, but rather a civil dispute. She referred the matter to our service and one of our investigators upheld her complaint. They thought that Miss M had fallen victim to a scam and under the provisions of the FPS Reimbursement Rules (“the Reimbursement Rules”) she was a vulnerable consumer at the time the payments were made – so she should be reimbursed. Starling didn’t agree, in summary it argued: - It could not have prevented her loss because she didn’t give accurate responses to its warnings - It didn’t know about her vulnerabilities at the time her payments were made or at the point she made her claim As no agreement could be reached, the case was 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. The Reimbursement Rules came into force on 7 October 2024 and apply to all UK-based Payment Service Providers (PSPs). They put a requirement on firms to reimburse APP scam payments made via the Faster Payments Scheme (a similar set of rules covers CHAPS payments), in all but very limited circumstances.

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A payment will be ‘reimbursable’ under the Reimbursement Rules (so far as is relevant to this complaint) if: - It was made in relation to a fraud, rather than in circumstances only giving rise to a private civil dispute. - The consumer was a ‘Vulnerable Consumer’. If both these criteria are met, a payment is reimbursable regardless of whether one of the exceptions to reimbursement (known as the Consumer Standard of Caution Exception) would apply or the PSP could have prevented the payment. An APP scam is defined 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” Starling initially argued that Miss M was involved in a civil dispute, but it has made no further submissions on this point. Briefly, I’m satisfied, on the balance of probabilities that Miss M did fall victim to a scam. - Mr A appears to have made a false claim – that the garage was owned by him and a relative. This claim appears to have played a significant role in inducing Miss M to make the payments. - The low initial price, another significant inducement, doesn’t appear to be based on any actual assessment of the price repairs – it doesn’t appear to be honest. - Mr A claimed to have identified further faults with the vehicle which necessitated additional payments being made by Miss M. There’s no evidence additional faults had been identified, as there’s no evidence that the garage carried out any work. It follows that these claims are false and likely made to encourage Miss M to make further payments. - Evidence from the banks which received Miss M’s money shows he didn’t use it in the way that he said he would. It wasn’t spent on repairs and the garage didn’t receive any money. - There appears to be other evidence of dishonesty on the part of Mr A too – his excuses for why he could not repay Miss M aren’t credible and he didn’t give factual information to his own bank when it questioned one of the payments. While this dishonesty appears to be after the fact (and can’t have induced the payments) – I think it goes to Mr A’s bad character. - Overall, I think that Miss M was deceived into making the payments and her purpose for those payments (to have the car repaired) was not the same as Mr A’s (to dishonestly take her money). I’m therefore satisfied that an APP scam has taken place. Our investigator concluded that Miss M was a vulnerable consumer as defined by the Reimbursement Rules and should be reimbursed on this basis. Again, Starling has not sought to challenge this finding and, briefly, I agree with it. Miss M has disclosed that she suffers from a number of serious mental health conditions and, at the time of the payments, had recently left an abusive relationship, having previously been involved in a serious car accident. She says that her mental health conditions make it

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difficult for her to regulate her emotions and means she is easily influenced by people who present themselves as supportive. These circumstances, as well as a difficult upbringing, estrangement from family and few friends appears to have led Miss M to put far more trust in Mr A than someone without her vulnerabilities might have done. He presented himself as someone who was supportive and even claimed to have experienced some of the same traumatic experiences that she’d gone through. I think this all made Miss M especially susceptible to harm and that she meets the definition of a vulnerable consumer under the rules. For the sake of clarity, it is irrelevant for the purposes of the Reimbursement Rules whether this information was known to Starling at the time of the payments or not. As Miss M was vulnerable, it also follows that Starling cannot deduct the excess that is otherwise allowable under the Reimbursement Rules. Like the investigator, I also think that Starling should pay an additional £50 (on top of the £50 already paid) to reflect the distress and inconvenience caused to Miss M when she sought additional clarity on Starling’s decision not to reimburse her. Finally it should pay interest on the amount reimbursed from the date it declined her claim under the Reimbursement Rules to the date of settlement. My final decision I uphold this complaint about Starling Bank Limited and instruct it to pay Miss M: - The outstanding amount loss from the disputed faster payments which debited Miss M’s Starling account – I calculate this amount to be £7,517 - 8% simple interest per year on that amount from the date it declined her claim under the Reimbursement Rules to the date of settlement - £50 in compensation Under the rules of the Financial Ombudsman Service, I’m required to ask Miss M to accept or reject my decision before 28 April 2026. Rich Drury Ombudsman

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