Lloyds Bank PLC · DRN-6225381

The complaint Mr K has complained about Lloyds Bank PLC not refunding several payments he says he made and lost to a scam. Mr K is being represented by a professional representative, however for ease I will refer to Mr K throughout. What happened The background of this complaint is well known to both parties, so I won’t repeat it in detail here. In summary, Mr K fell victim to an investment scam after he was contacted via a well- known social media app. He joined a group the scammer created and was given access to a sophisticated investment platform. Mr K sent the funds first to a legitimate cryptocurrency exchange before forwarding them to the scammer. He subsequently discovered it was a scam when the scammer stopped communicating with him and he did not receive his expected profits. Mr K subsequently raised his concerns with Lloyds; however, it did not compensate him for the losses he claims. So, he referred the complaint to us and one of our Investigator’s considered his allegations. Our Investigator did not agree that Lloyds had to refund compensate him. She highlighted that when Mr K was asked the reason for his payment, he selected an incorrect reason, which limited the bank’s ability to identify the true nature of the transaction. Additionally, she noted Mr K was receiving returns from the cryptocurrency exchange – which would have made his account activity look more like genuine trades. Our Investigator also pointed out the relationship between Mr K and the scammer was built up over many years – with Mr K maintaining contact even after disputing the payments. So, she wasn’t persuaded that had Lloyds intervened it would have prevented Mr K proceeding. Mr K disagreed and requested a decision. As our Investigator couldn’t resolve the matter informally, the case 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 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. 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 fair outcome. Our rules allow me to do this. This simply reflects the informal nature of our service as a free alternative to the courts. I don’t doubt Mr K has been the victim of a scam here – he has lost a large sum of money and has my sympathy for this. However, just because a scam has occurred, it does not

-- 1 of 4 --

mean Mr K is automatically entitled to recompense by Lloyds. It would only be fair for me to tell Lloyds to reimburse Mr K for his loss (or a proportion of it) if: I thought Lloyds reasonably ought to have prevented all (or some of) the payments Mr K made, or Lloyds hindered the recovery of the payments Mr K made – whilst ultimately being satisfied that such an outcome was fair and reasonable for me to reach. I’ve thought carefully about whether Lloyds treated Mr K fairly and reasonably in its dealings with him, when he made the payments and when he reported the scam, or whether it should have done more than it did. Having done so, I’ve decided to not uphold Mr K’s complaint. I know this will come as a disappointment to Mr K and so I will explain below why I’ve reached the decision I have. I have kept in mind that Mr K made the payments himself and the starting position is that Lloyds should follow its customer’s instructions. So, under the Payment Services Regulations 2017 (PSRs 2017) he is presumed liable for the loss in the first instance. I appreciate that Mr K did not intend for his money to ultimately go to fraudsters – but he did authorise these payments to take place. However, there are some situations when a bank should have had a closer look at the wider circumstances surrounding a transaction before allowing it to be made. Considering the 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 - Lloyds should fairly and reasonably: • Have been monitoring accounts and any payments made or received to counter various risks, including anti-money laundering, countering the financing of terrorism, and preventing fraud and scams. • Have had systems in place to look out for unusual transactions or other signs that might indicate that its customers were at risk of fraud (among other things). This is particularly so given the increase in sophisticated fraud and scams in recent years, which payment service providers are generally more familiar with than the average customer. • In some circumstances, irrespective of the payment channel used, have taken additional steps, or make additional checks, before processing a payment, or in some cases decline to make a payment altogether, to help protect customers from the possibility of financial harm from fraud. So, I’ve thought about whether the transactions should have highlighted to Lloyds that Mr K might be at a heightened risk of financial harm due to fraud or a scam. Having done so, I am not persuaded it would be reasonable to hold Lloyds liable for the losses Mr K unfortunately incurred. I say this because: • I’m not persuaded that, even if all of Mr K payments to the cryptocurrency exchange were due to this scam, Lloyds could have prevented him making these payments. • The level of intervention (if any) I would have expected, based upon Mr K’s payments, would have been no more than a tailored warning relevant to cryptocurrency investment scams. However, I am not persuaded that such a tailored warning would have resonated with him. Overall, I’ve not seen sufficient evidence that there were any wider red flags that ought to have been of concern to Lloyds and triggered a higher level of intervention. • Mr K believed this to be a genuine opportunity through a trusted individual that he had some level of acquaintanceship with for multiple years. Although Mr K does not appear to have engaged with the scammer’s previous investment “opportunities”, he

-- 2 of 4 --

clearly considered this person someone he could seek reliable expert advice from and spoke with via social media. • Mr K met with the scammer in person and even took a picture with them – which not only evidences the apparent closeness of them but would have added to Mr K’s belief in the scammer’s legitimacy. Mr K’s relationship with the scammer being built up gradually over such a period, and generally the way Mr K became part of this scam, is more unusual than how investment scams usually occur – with Mr K eventually deciding to join the platform after many years without any pressure from the scammer. I’m persuaded this would have impacted Mr K’s receptiveness to a warning from Lloyds as well. • Mr K had completed investments into cryptocurrency himself – which no doubt added to his level of confidence in the investment strategy he was following. Additionally, Mr K looks to have received some credits back from the scam as well. • The scam chats make it clear that Mr K was under such a belief in the scam being legitimate that he turned down the scammers offer to cover his losses (albeit this was unlikely to have been a true offer). • Mr K’s decision to select the less relevant option when asked why he was completing the payment - “Move my Money” rather than “Investing” was also not accurate. Although not completely misleading, it meant Mr K was not shown a warning that would have been more applicable to his circumstances and may well have resonated with him. I’ll add here that I do not think that he was attempting to mislead Lloyds purposefully – but, it still had the impact of evading some of its security measures. • I’ve seen no evidence that the scammer’s influence was waning or that any further intervention would have led to a different outcome. • I’ve considered whether Lloyds could have done anything further to recover Mr K’s lost funds. However, as he paid the funds to himself at a legitimate cryptocurrency exchange, before forwarding them to the scammer, Lloyds would only have been able to attempt to recover them from his own wallet – not the scammer directly. Therefore, I do not think Lloyds could have successfully recovered the funds. • Although Lloyds has signed up to the Contingent Reimbursement Model Code, the transfers Mr K made from his Lloyds account aren’t covered by the Code because the payments were made prior to its introduction. I cannot fairly and reasonably say that Lloyds should have to refund payments under the Code when it doesn’t apply here. • I’ve noted Mr K has referenced decisions that he believes are close to his circumstances. However, we consider each case on its own individual merits and although he believes the circumstances of other decisions seem to be similar, there are key differences. • I am sorry to hear about the vulnerable situation Mr K was in at the time of the scam and how the scammer may well have used this to ensure he invested. The repercussions such a cruel scam has had on Mr K is not something I have overlooked when reaching my decision. However, I have not seen a pattern emerge that would have highlighted to Lloyds that Mr K was in a vulnerable situation, or that this may have been impairing his decision-making during this scam. I am empathetic towards him, but I do not consider his situation, in isolation of any other clear indicators of a potential risk of financial harm, to be something that should have triggered further red flags for Lloyds. I am sorry to hear of the losses Mr K has lost because of this cruel scam. However, I do not think these losses could have been prevented by Lloyds. Therefore, I do not uphold this complaint.

-- 3 of 4 --

My final decision My final decision is I do not uphold this complaint against Lloyds Bank PLC. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr K to accept or reject my decision before 27 April 2026. Lawrence Keath Ombudsman

-- 4 of 4 --