Starling Bank Limited · DRN-6255384

The complaint Ms M and Mr M complain that Starling Bank Limited (‘Starling’) won’t refund the money they say was lost as the result of a scam. What happened The background to this complaint is well known to both parties, so I won’t go into detail. As Mr M made the investment, I’ll mainly refer to him in this decision. Mr M became aware of an investment opportunity, which involved buying shares in a company I’ll refer to as N. Mr M made a payment of £10,003.72 from his joint account in January 2024. The payment was made to a third-party company that I’ll refer to as G. In July 2024, the Financial Conduct Authority (FCA) placed restrictions on N’s parent company (which I’ll refer to as B) following concerns about its failings related to N. In May 2025, B entered administration. Mr M believes the investment was a scam and raised a fraud claim with Starling. Starling declined to refund him, saying it was a genuine high-risk investment that failed. So, it deemed the issue a civil dispute which wouldn’t be covered by the Contingent Reimbursement Model Code (CRM Code). Mr M wasn’t happy with Starling’s response, so he brought a complaint to our service. An investigator looked into his complaint but didn’t uphold it. The investigator wasn’t satisfied that Mr M had shown his loss was the result of a scam or that Starling should’ve prevented Mr M’s loss when the payment was made. Mr M disagreed with the investigator’s opinion and asked for an ombudsman to review his case. Mr M feels the payment warranted more than an onscreen written warning by Starling, that Starling should’ve asked about the regulatory status of the person who recommended the investment, and Starling should’ve clarified the ultimate beneficiary. 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 really sorry to hear about the impact this loss has had on Mr M and his family. But, having considered all of the evidence, I’ve reached the same answer as the investigator and for the same reasons.

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Starling was a signatory of the CRM Code at the time Mr M made his payment. This requires firms to reimburse customers who have been the victims of Authorised Push Payment (APP) scams, in all but a limited number of circumstances. The CRM Code defines what is considered an APP scam as, “where the customer transferred funds to another person for what they believed were legitimate purposes, but which were in fact fraudulent”. In order to decide whether Mr M meets the definition of an APP scam, I need to decide whether the purpose Mr M had for making the payment, and B/N had for obtaining the payment, were broadly aligned. And, if there is a significant difference in these purposes, whether it was as the result of dishonest deception. Here, I’m not satisfied that the evidence supports Mr M’s claim that he was the victim of an APP scam or that B/N obtained his funds by fraudulent deception. I’ll explain why. After making his payment to G, Mr M received a share certificate confirming his investment, and says he received a payment from HMRC in May 2024 for £3,055.36 – which was tax relief related to his investment. Receiving the share certificate and the HMRC payment suggests that the funds were transferred by G to B/N as intended when Mr M made the payment. I haven’t seen any evidence that suggests G obtained Mr M’s funds with a different purpose in mind. Mr M’s investment qualified for the Enterprise Investment Scheme (EIS) which was a government initiative to stimulate investment in early-stage businesses through venture capital – offering tax relief to investors who support them. The fact that Mr M received this tax relief payment also suggests that the investment was genuine. B, N and G were FCA regulated at the time Mr M made his payment and were UK incorporated companies. While the FCA placed restrictions on B due to concerns it had in relation to N, poor business practices or failure to meet regulatory requirements don’t necessarily mean that the investment was a scam. Also, while B went into administration, we don’t have any evidence from the administrator that suggests Mr M’s funds weren’t used for the intended purpose – an EIS investment. I realise that Mr M has suffered a financial loss on his investment, but the CRM Code wasn’t meant to cover high-risk investments that fail for genuine reasons. And all of the evidence I’ve seen suggests that this was a genuine investment which failed. So, I’m not satisfied that Mr M has met the definition of an APP Scam or that his payment is covered by the CRM Code. There are, however, some situations where we believe that businesses, taking into account relevant rules, codes and best practice standards, shouldn’t have taken their customer’s authorisation instruction at ‘face value’ – or should have looked at the wider circumstances surrounding the transaction before making the payment. Starling also has a duty to exercise reasonable skill and care, pay due regard to the interest of its customers and to follow good industry practice to keep customer’s accounts safe. This includes identifying vulnerable consumers who may be particularly susceptible to scams and looking out for payments which might indicate the consumer is at risk of financial harm. I can see that Starling asked Mr M questions onscreen when he was making the payment, so they could provide a tailored warning. As part of the warning, Mr M was told that all

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financial advisors and financial institutions should be registered with the FCA, he should research the company before investing by checking reviews, and he should check the contact details of the payee were genuine. But, even if Starling had called Mr M to discuss the payment in more detail, I’m not satisfied this would’ve prevented his loss. I say this because all of the information available to Mr M suggested this was a legitimate investment, offered by a company that was FCA regulated. There wasn’t any information available that suggested B, N or G weren’t legitimate UK companies or that Mr M was at risk of financial harm from fraud. Also, there isn’t an expectation on Starling to provide investment advice or to determine whether an investment is suitable for Mr M’s situation. They’re only required to ask questions to identify any potential indicators that Mr M may be at risk of a financial loss due to fraud. And, in this situation, I’m not satisfied that any of the information available meant Starling should’ve been concerned or that they should’ve refused to follow Mr M’s payment instructions. I’m really sorry to disappoint Ms M and Mr M, but I’m not satisfied that I can fairly hold Starling liable for their loss. My final decision My final decision is that I don’t uphold this complaint against Starling Bank Limited. Under the rules of the Financial Ombudsman Service, I’m required to ask Ms M and Mr M to accept or reject my decision before 26 May 2026. Lisa Lowe Ombudsman

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