DRN-6127581

The complaint Mr M complains that MONZO BANK LIMITED (“Monzo”) will not refund money he lost when he was a victim of an investment scam. Mr M is professionally represented, however for ease, I’ll refer to Mr M throughout my decision. What happened The background to this complaint is well known to both parties and so I’ll only refer to some key events here. Mr M has explained that he fell victim to an investment scam in 2022, whereby he came across a firm, which I’ll refer to as ‘X’, advertised on social media referring to an investment opportunity. As part of this scam, Mr M was convinced to download a trading platform for X and he made an initial payment of £204.41 from another one of his banking providers, which I will refer to as ‘S’. Between 8 July 2022 and 26 October 2022, Mr M sent just over £110,000 from his Monzo account to an Electronic Money Remittance (EMI) account in his own name, X helped him set up, which I will refer to as ‘R’. And from there onto X via a crypto exchange provider. He also received returns from X of just under £18,000 between July and August 2022. Mr M has raised separate complaints against S and R, which I will address individually. Mr M said he realised he’d been scammed when he confided in a friend in December 2022 about his investment with X. And after carrying out some research, his friend confirmed the Financial Conduct Authority (FCA) had issued a warning against dealing with X on 21 November 2022, as it was likely they were providing financial services and products without FCA authorisation, and the warning said, you should avoid dealing with this firm and beware of potential scams. Mr M raised a complaint with Monzo in June 2025, which they didn’t uphold, so the matter was referred to our service. Our Investigator also didn’t uphold the complaint. He said, Monzo, S and R, did intervene on some of the payments Mr M made and provided him with warnings. However, even if further interventions were carried out, he didn’t think it would’ve uncovered the scam or prevented Mr M from sending the funds, due to the influence of X and the coaching and guidance he had received, so he didn’t think Monzo needed to do anything else. Mr M didn’t agree and said Monzo should have done more to protect him from the investment scam he fell victim to. He said a proportionate intervention from Monzo would’ve resulted in the scam being uncovered and his loss being prevented. As no agreement could be reached, Mr M’s complaint has been passed to me to decide.

-- 1 of 6 --

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 sorry Mr M has been the victim of a scam, and I don’t underestimate the impact this has had on him. But while I’m sympathetic to his circumstances, I must consider whether Monzo is responsible for the loss he has suffered. I know this won’t be the outcome Mr M is hoping for, but for similar reasons as our Investigator, I don’t think they are. And so, I don’t think Monzo has acted unfairly by not refunding the payments. I’ll explain why. In broad terms, in line with the Payment Services Regulations (PSR) 2017, consumers are generally liable for payments they authorise. Monzo is expected to process authorised payment instructions without undue delay. As a bank, it also has long-standing obligations to help protect customers from financial harm from fraud and scams. However, there are many payments made by customers each day and it’s not realistic or reasonable to expect a bank to stop and check every payment instruction. There’s a balance to be struck between identifying payments that could potentially be fraudulent, and minimising disruption to legitimate payments. 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 - Monzo 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 made 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 need to decide if Monzo acted fairly and reasonably in their dealings with Mr M when he made the payments. Specifically, whether they should’ve done more than they did before processing them – and if they had, would that have made a difference. But for me to find it fair and reasonable that Monzo should refund Mr M requires more than a finding that it ought to have intervened or done more, but crucially I’d need to find that but for this failure the subsequent loss would’ve been avoided. That latter element concerns causation. A proportionate intervention will not always result in the prevention of a payment. And if I find it more likely than not that such a proportionate intervention by Monzo wouldn’t have revealed the payments were part of a fraud or scam, then I couldn’t fairly hold them liable for not having prevented them from being made. Monzo’s interventions:

-- 2 of 6 --

Here, Monzo have said Mr M was provided with the following new payee warning on 8 July 2022, when he made a payment of £100 to R. “New payee warning Could this payment be to someone trying to scam you? If you have any doubts (for example you don’t personally know the recipient, get some advice. Bear in mind that once you make a payment, it’s almost impossible for us to get the money back.” Mr M confirmed he understood the risks involved and decided to proceed with the payment. Monzo then showed Mr M the following warning: “Could someone be trying to scam you? Stop if: • You were told your account is at risk, to make an unexpected payment, or to take out a loan. • The offer sounds too good to be true. • You haven’t double-checked who you’re paying. • You were told to ignore warnings like this. You may lose money if this is a scam. If you’re at all unsure, stop and get advice. We’ll never call you out of the blue We’ll always let you know in advance by email or by arranging it in the app chat first” Mr M confirmed he had read and understood the above warnings and he wanted to continue with the payment, which he did. Mr M also asked Monzo to increase his limit on three occasions, which required him to provide identification, which he did, as well as a reason for the limit increase. In response, Mr M said the following on 26 July 2022; “The money is being sent to R personal account as I’ve already mentioned earlier in this chat and also included as a reference in both selfies. Maybe you need to take another look at my selfies”. Monzo also provided the following warning to Mr M when he requested the limit increases: “Finally, in an effort to help protect you against fraud, please note: a bank will never ask you to increase your limits and if they have, it may be a scam. If someone has asked you to increase your limits, including someone claiming to be from Monzo or another bank, please don’t continue and let our team know instead so we can help you with next steps.” Monzo didn’t intervene on any further payments Mr M made to R to fund the scam, which overall totalled just over £110,000. R’s intervention:

-- 3 of 6 --

I’ve also considered, Mr M’s interactions with R during the duration of the scam. R have said Mr M was provided with the following warning when he attempted to make a payment from R of 1 euro (86p) on 23 June 2022, to a new beneficiary - that being the crypto exchange account Mr M opened under the guidance of X. “Do you know and trust the payee? If you’re unsure, don’t pay them, as we may not be able to help you get your money back. Remember, fraudsters can impersonate others, and we will never ask you to make a payment.” Mr M confirmed he understood the potential risks and wanted to proceed with the transaction. R have said no further interventions were made aside from the new beneficiary warning above. S’s intervention: S have said when Mr M attempted to make a payment on 23 June 2022 of £5,000 from S to R, they intervened, and the payment was blocked, which required Mr M to call and speak to S before the payment was released. On the call, Mr M told S the following: o He was making the payment to a new account he’d opened with R in his own name. o He confirmed he made a smaller payment to the same account earlier in the day to check if the new account worked, which it did. o He asked S if the payment was blocked due to the value, which the advisor denied, and if he will have similar issues going forward, which the advisor said, it should be fine as the account details match. Based on the conversation between Mr M and S, he was provided with safe account scam warnings and the payment was approved. S have confirmed no further interventions took place as Mr M made further payments from S to R. Scam chat review I will not set out the specifics of the scam chat Mr M had with X here, as he is already familiar with it. But where the evidence is incomplete, inconclusive, or contradictory, I must make my decision on the balance of probabilities – that is, what I consider is more likely than not to have happened in the light of the available evidence and the wider surrounding circumstances. In this situation it’s clear Mr M has multiple telephone conversations with X during the scam period, which unfortunately, aren’t available for us to review. However, I think it’s clear from the scam chat, Mr M had built up a strong relationship with X before he made the first payment to X on 23 June 2022 from S. This is evident from the scam chat we’ve been provided, when X told Mr M on 22 June 2022, to download and open an account with a crypto exchange provider, as well as an account with R following a phone call conversation, which Mr M did on the same day. When Mr M was unsure about how to do anything X had asked him to do, Mr M would ask X to call him to explain the process which happened on several occasions. On 23 June 2022, Mr M told X, his account had been blocked by S, as the payment needs to undergo a further review. X asked if he had another account, or a different way to move money around. Mr M mentioned he didn’t have another bank account, but he suggested himself that he might transfer both his accounts over this issue. On 27 June 2022, X said the following: “You have to move bank!” after Mr M said his account with S had been blocked again, after he attempted a £10,000 payment to R. Mr M replied with: “That’s my plan”. And the next day, on 28 June 2022, Mr M confirmed to X he

-- 4 of 6 --

had managed to switch both his current and business account from S to Monzo, which is a clear indication that Mr M was circumventing any friction or interventions he received from his banks to allow him to continue making the payments to X. On 17 August 2022, following a call between X and Mr M, when the conversation moves back online, Mr M talks about his properties and the value of his property in London, which he said he’s arranged for a mortgage valuation with an estate agent to sell the property. This again is a strong indication of the influence and guidance of X on Mr M. He also mentioned to X on 7 September 2022, that he will need to provide further details to the provider about a larger loan he has applied for. Although, Mr M didn’t go ahead with the loan and instead decided to sell his house, he was willing to make up a cover story to convince the lender why he needed the large loan, when on 24 October 2022, Mr M said the following to X: “Whichever option we use we will need to provide details of the works that you intend to carry out to the house and these would need to be non-structural, not require full planning and the house will need to remain habitable throughout the works. I’m seeing if my builder can make me up a quotation. I will struggle to substantiate £200k. Will see what I can do”. Summary The above information is a clear indication of the lengths Mr M was willing to go to, to ensure his payments to X went through without any friction. The scam chats we have available include Mr M willing to sell his house; discussing providing falsified quotations to get a large loan approved, and moving his bank accounts, when payments were being blocked for further questions to avoid any delays in making the payments to X. As a result, even though I do think Monzo could have provided further intervention on the payments Mr M made to R, I don’t think this would have made a difference due to the influence X had on him and the trust he had already build up with X and the investment he thought he was making. I therefore don’t think any further intervention from Monzo would have been able to break X’s spell such that Monzo could have uncovered the scam and prevented his losses. On a final note, I’ve considered whether, on being alerted to the scam, Monzo could reasonably have done anything more to recover Mr M’s losses, but I don’t think they could. The funds were sent from Mr M’s Monzo account to R and then onto X via a crypto exchange provider in 2022. However, the scam wasn’t reported until 2025. In any case, the funds were sent to an account in Mr M’s control before being forwarded on to X. So, no funds would’ve remained. But even if they did, they would’ve remained in Mr M’s control and he could’ve accessed them himself. I have a great deal of sympathy for Mr M and the loss he’s suffered. I appreciate he is the innocent victim of a scam, and he has lost a significant sum of money. But it would only be fair for me to direct Monzo to refund his loss if I thought they were responsible – and I’m not persuaded that this was the case. I realise this means Mr M is out of pocket and I’m sorry he’s lost this money. However, for the reasons I’ve explained, I don’t think I can reasonably uphold this complaint. My final decision My final decision is that I do not uphold this complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr M to accept or reject my decision before 26 May 2026. Israr Ahmed

-- 5 of 6 --

Ombudsman

-- 6 of 6 --