Bank of Scotland plc trading as Halifax · DRN-6026617

The complaint Mrs B complains that Bank of Scotland plc trading as Halifax (Halifax, hereinafter) hasn’t refunded the losses she’s incurred when falling victim to an investment scam. What happened The facts are well known to both parties, so I have outlined the key details. In summary, Mrs B says she was contacted on a social media messaging platform about an investment opportunity involving cryptocurrency, in or around January 2025. She registered her interest and was contacted back by someone purporting to be her investment manager. Unbeknown to Mrs B, this was sadly a scam. Mrs B was guided by the scammer to send funds via a cryptocurrency wallet with a genuine provider I’ll refer to as K and sent her funds to them from there. Mrs B borrowed from family friends and relatives extensively to make the scam payments. From her Halifax account she sent a total of £17,600 over seven faster payments to her wallet with K, which were processed via open banking. She’s told us she received about £100 in returns into her cryptocurrency wallet, which she later re-invested in the scam. She wasn’t able to withdraw any returns into her bank accounts. The scam was unveiled when the scammer asked Mrs B to pay a further commission fee to them in order to withdraw her earnings and when she was blocked out from the scam trading platform. Mrs B reported the scam to Halifax, but it refused to refund her on the basis that the funds went to an account in her own name and control and so it could not be held responsible for the loss. So, Mrs B referred a complaint to the Financial Ombudsman Service. Our Investigator found that Halifax should have intervened when Mrs B made the third scam payment to the scammer for £5,000 on 23 March 2025. Mrs B hadn’t been coached by the scammer on what payment reasons to give, so if Halifax had issued a warning tailored to the risks posed by cryptocurrency investment scams, this would have resonated with Mrs B and successfully unveiled the scam. Our Investigator however said Mrs B was also responsible for her loss because she didn’t appropriately research the investment and took the scammer’s words at face value. So, it was recommended liability for the losses should be shared equally by the parties. Mrs B accepted our Investigator’s view, but Halifax disagreed, stating that Mrs B had made payments to cryptocurrency before the scam payments and that the activity wasn’t unusual enough to require its intervention.

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In light of this disagreement, I have been asked to review everything afresh and reach a decision on the matter. 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 right outcome. Our rules allow me to do this. This simply reflects the informal nature of our service as a free alternative to the courts. 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. I don’t doubt Mrs B has been the victim of a scam here –she has lost a large sum of money and has my sympathy for this. However, just because a scam has occurred, it does not mean Mrs B is automatically entitled to recompense by Halifax. It would only be fair for me to tell Halifax to reimburse Mrs B for her loss (or a proportion of it) if: • I thought Halifax reasonably ought to have prevented all (or some of) the payments Mrs B made, or • Halifax hindered the recovery of the payments Mrs B made whilst ultimately being satisfied that such an outcome was fair and reasonable for me to reach. I’ve thought carefully about whether Halifax treated Mrs B fairly and reasonably in its dealings with her, when she made the payments and when she reported the scam, or whether it should have done more than it did. Having done so, I’ve decided to uphold Mrs B’s complaint in part, in line with our Investigator’s findings. I’ll explain why. Was Halifax required to intervene on Mrs B’s scam payments? I have kept in mind that Mrs B made the payments herself, and the starting position is that Halifax should follow its customer’s instructions. So, under the Payment Services Regulations 2017 (PSR 2017) she is presumed liable for the loss in the first instance. However, there are some situations when a bank, such as Halifax, should have had a closer look at the wider circumstances surrounding a transaction before allowing it to be made. So, overall, 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 – Halifax 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.

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• 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. • Have acted to avoid causing foreseeable harm to customers, for example by maintaining adequate systems to detect and prevent scams and by ensuring all aspects of its products, including the contractual terms, enabled it to do so. So, I’ve thought about whether the transactions should have highlighted to Halifax that Mrs B might be at a heightened risk of financial harm due to fraud or a scam. From Halifax’s submissions, I understand it didn’t intervene at all throughout the scam payments. It said Mrs B had made high value faster payments before the scam and that the scam payments didn’t stand out against prior genuine activity from her account, as there is evidence she had made payments to cryptocurrency providers from December 2024. Halifax ultimately argued that it wasn’t required to block any of Mrs B’s payments as they went to an account in her own name and control and a genuine cryptocurrency provider. However, I can’t accept this argument. It’s widely known and accepted in the industry that payments involving cryptocurrency can carry higher risks than other types of payments, with millions of pounds having been lost by UK customers via cryptocurrency payments to scammers in recent years. Therefore, due to the prevalence of scams involving cryptocurrency payments, I think it would be reasonable to expect Halifax to have been on the lookout and monitor its customers’ accounts against the risks associated with those payments, by the time these events took place in February 2025. I recognise that not every payment going to cryptocurrency providers will be part of a scam, and that it would be wholly impracticable for financial firms to block every cryptocurrency payment made from their payment facilities, as trading cryptocurrency isn’t per se an illegal activity. The payment would need to be suspicious, taking into account a multitude of factors, and not its destination alone. So, looking at the scam payments pattern and Mrs B’s previous genuine activity, I think Halifax wasn’t required to intervene on the first two payments, due to the earlier genuine activity towards cryptocurrency providers and the individual value of the payments, which was in line with earlier transactions from Mrs B’s account. However, I agree with our Investigator that payment 3, that is the £5,000 payment of 23 March 2025, should have prompted Halifax’s intervention, because it was significantly high value, both on its own and when compared against earlier genuine activity. The payment was also heading to a cryptocurrency provider, and whilst Mrs B may have made some payments towards cryptocurrency in the months leading up to the scam, their value and overall financial activity from Mrs B’s account in the months leading up to the scam wasn’t comparable to this one.

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I think these factors, taken together, ought to have alerted Halifax about the potential risk of scams or fraud. So, it shouldn’t have processed that payment without first taking steps to warn Mrs B about the risk of scams. In the individual circumstances of this case, I would have expected Halifax to have intervened, and a proportionate intervention would have taken the form of a better automated warning, asking questions specifically aimed at narrowing down the risks posed by Mrs B’s payment. Moreover, as the payment was going to a genuine cryptocurrency provider, it should have also warned Mrs B about the risks posed by investment and cryptocurrency scams, independently of the reasons Mrs B had given for the payment. An interactive warning should have described the main features of cryptocurrency scams and asked questions to, for example, identify how Mrs B had found the investment opportunity, whether it was endorsed by a notable celebrity, whether Mrs B was being aided when making the transactions by an account manager, and what rate of returns she had been offered. It should also have given an opportunity to Mrs B to explain what she intended to do with the funds after they had landed in her cryptocurrency wallet and warned her about the risks posed by investment not regulated by the Financial Conduct Authority (FCA). Would Halifax’s intervention have prevented Mrs B’s further losses? The question for me to answer next is whether, on the balance of probabilities, Halifax would have been able to prevent Mrs B’s further losses, had it intervened during the scam, in the way I’ve described above. I’ve considered that point carefully and I’m persuaded a better automated warning would have successfully unveiled the scam for Mrs B. I say this due to the following reasons. Having reviewed the transcripts of Mrs B’s chats with the scammer, there’s no evidence on there that she was coached on what to tell the bank, if it had intervened and blocked any of her payments. Mrs B borrowed considerably in order to meet the scammer’s demands for payments, and it transpires from her communication with the scammer that she was very scared about the risks of losing, not only her funds, but those of her loved ones too. Moreover, the chat transcripts show that Mrs B followed her friends’ advice when they told her she’d most likely fallen victim to a scam, and that the scam was fully unveiled when Mrs B outright refused to make another payment when the scammer insisted she needed to, in order to withdraw her investment. I must consider this information as I weigh up the chances of Mrs B being receptive to the bank’s advice. I believe this evidence supports the finding that the scammer’s hold on Mrs B wasn’t unshakeable or impossible to overcome. On the other hand, I’m persuaded Mrs B would have been most likely receptive to Halifax’s advice if it had been relevant enough to her circumstances. And bearing in mind the features of the scam Mrs B was falling victim to, I believe a thorough investment scam written warning, mentioning contact via social media channels, fake investment platforms and withdrawal fees to be paid in advance, would have most likely resonated with Mrs B and made her reconsider making further payments to the scam.

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Overall, due to the above considerations, I’m inclined to believe that, more likely than not, Mrs B wouldn’t have disguised the genuine reasons of her payments, had Halifax intervened, and would have most likely answered its questions honestly which would have ultimately led to the scam being unveiled. So, I’m persuaded that, had Halifax intervened as Mrs B was making payment 3, that intervention would have most likely prevented this and all following losses, so it should refund Mrs B for them. Did Mrs B contribute to her own losses? I’ve thought about whether Mrs B should bear any responsibility for her losses. In doing so, I’ve considered what the law says about contributory negligence, as well as what I consider to be fair and reasonable in all of the circumstances of this complaint, including taking into account Mrs B’s own actions and responsibility for the losses she has suffered. I understand that Mrs B accepted our Investigator’s view on this aspect of the complaint, so I will only address it briefly for completeness. In essence, I also agree that the losses should be equally shared in the circumstances. I say this because Mrs B was contacted by the scammer out of the blue and she has provided no evidence of the research she carried out into the investment before proceeding to make high value payments towards it. She says she didn’t find any adverse information online, which she took to mean that the opportunity was legitimate, but I’ve identified negative reviews online labelling the investment as a scam that predate her payments, which call into question the depth of her research. I would also have expected her to check whether the investment was regulated by the FCA and, since it wasn’t, this should have raised a red flag with Mrs B and prompted her to get a second opinion or carry out some more in-depth research, also on her account manager’s credentials. Moreover, the evidence shows Mrs B was offered returns that were wildly too good to be true. She lost money on the scam trading platform and experienced issues trying to contact the scam customer service operators on several occasions, but instead of realising these could be the signs of a scam, she continued to borrow from family and friends and asked the scammer to help her secure a loan from the trading platform to offset the losses she had already sustained. Overall, looking at the circumstances, I think Mrs B should have, on balance, realised there was a possibility the situation was not genuine and acted accordingly, much earlier than she did. As such, it would not be fair to require Halifax to compensate her for the full amount of her remaining losses. Weighing the fault that I’ve found on both sides, I’ve concluded, on balance, that a fair deduction would be for Mrs B to bear 50% of her losses. Recovery I have thought about whether Halifax could have contacted K to recover Mrs B’s funds. But Mrs B said she had moved the funds on from her cryptocurrency wallet to the scammer, so any recovery action from the point of reporting the scam to Halifax would have not been successful, as no funds were left in Mrs B’s wallet with K. So, I don’t think Halifax could have done more to recover Mrs B’s funds in this instance.

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Putting things right To put things right, Bank of Scotland plc trading as Halifax should now: • Pay Mrs B 50% of her loss from payment 3 onwards, along with 8% simple interest per annum from the date of each payment to the date of settlement* I consider that 8% simple interest per year fairly reflects the fact that Mrs B has been deprived of this money and that she might have used it in a variety of ways. *If Halifax considers that it’s required by HM Revenue & Customs to deduct income tax from the interest I’ve awarded, it should tell Mrs B how much it’s taken off. It should also give Mrs B a tax deduction certificate if she asks for one, so she can reclaim the tax from HM Revenue & Customs if appropriate. My final decision For the reasons given above, I uphold this complaint in part. Under the rules of the Financial Ombudsman Service, I’m required to ask Mrs B to accept or reject my decision before 22 April 2026. Daria Ermini Ombudsman

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