Lloyds to re­pay de­frauded cou­ple £47,000

These read­ers fell vic­tim to con­veyanc­ing fraud­sters – but the om­buds­man took their side, says Amelia Mur­ray

The Daily Telegraph - Your Money - - FRONT PAGE -

In what could be a break­through rul­ing for victims of bank­ing fraud, the fi­nan­cial om­buds­man is to or­der a high street bank to re­pay an elderly cou­ple who lost tens of thou­sands of pounds in a con­veyanc­ing scam. The om­buds­man, which set­tles dis­putes be­tween cus­tomers and fi­nan­cial ser­vices firms, will tell Lloyds Bank to re­pay £47,508 plus in­ter­est to Donald Kelly, a re­tired pro­fes­sor, and his wife, Pa­tri­cia.

Its de­ci­sion was based on what Lloyds knew about the fraud­sters. Banks are sup­posed to check the cre­den­tials of all cus­tomers when they open an ac­count and to be es­pe­cially vig­i­lant when large sums are paid into or taken out of new ac­counts.

Prof Kelly, 83 and Mrs Kelly, 82, are just two of many victims who have con­tacted Tele­graph Money after be­ing swin­dled out of lifechang­ing amounts of money while in the process of buy­ing a prop­erty (see box, right).

Like other victims, the Kellys re­ceived a con­vinc­ing-look­ing email from a crim­i­nal who pre­tended to be their so­lic­i­tor and re­quested pay­ment into an al­ter­na­tive ac­count.

The Kellys be­lieved they were pay­ing a de­posit of £47,508 to their so­lic­i­tor on Septem­ber 2 last year, just over a month be­fore mov­ing from Wir­ral, Mersey­side, to their new home in a re­tire­ment vil­lage in Ex­eter. In fact, the fraud­sters re­ceived the money. Prof Kelly said: “The email looked no dif­fer­ent ex­cept that two letters in the so­lic­i­tor’s name had been swapped around.”

The Kellys said they were not aware that they had been victims un­til Oc­to­ber 5, the day be­fore they were

due to move, when Ford Simey, their so­lic­i­tor, called them to say their pay­ment had not been re­ceived. Luck­ily the cou­ple were able to bor­row the miss­ing funds and move as planned.

The next day they vis­ited the lo­cal branch of their bank, NatWest, to re­port the scam.

How­ever, the fraud­sters’ ac­count had been cleared in five trans­ac­tions on the day the pay­ment was made – a month pre­vi­ously. The cou­ple com­plained to both banks and then took their case to the om­buds­man.

In an email to the Kellys with her pro­vi­sional find­ings, San­dra Quinn, the om­buds­man for bank­ing and credit, said: “I can re­view whether the pay­ment com­ing into the ac­count was con­sis­tent with what [Lloyds] knew and whether it could have done any­thing.

“I be­lieve [Lloyds] had time to be alerted and take some ac­tion and there’s no ev­i­dence it did.”

Prof Kelly said the om­buds­man had told him that this de­ci­sion had been con­firmed in its fi­nal rul­ing, al­though the om­buds­man de­clined to com­ment, say­ing it had not yet sent a let­ter with its fi­nal de­ci­sion.

Lloyds said: “We would like to apol­o­gise for the in­con­ve­nience caused to Prof Kelly. We will ac­cept the de­ci­sion from the om­buds­man once it is re­ceived and will of­fer him com­pen­sa­tion in line with the om­buds­man’s find­ings.”

David Wil­liams, man­ag­ing di­rec­tor of Ford Simey, said the firm had con­ducted an in­ves­ti­ga­tion as soon as it be­came aware of the scam and had found no ev­i­dence that its sys­tems had been com­pro­mised.

What the Kellys’ case means for other fraud victims

The cou­ple’s success will give hope to other victims that they have grounds to de­mand com­pen­sa­tion from banks that al­low fraud­sters to open ac­counts. Banks are sup­posed to carry out checks on new cus­tomers to en­sure that they are who they say they are.

An­drew Good­will, founder of the Good­will group, which fights fraud, said: “The om­buds­man’s rul­ing, while it will not set a for­mal prece­dent, sug­gests there was a flaw in the due dili­gence that Lloyds should have car­ried out when the fraud­sters’ ac­count was opened.”

He said that al­though the om­buds­man could com­ment on banks’ pro­cesses, it did not have the power to en­force changes. But he said the rul­ing showed it was worth re­port­ing dis­putes to the om­buds­man.

“It’s nice that a mem­ber of the pub­lic has taken on the banks and won, as it hardly ever hap­pens,” Mr Good­will said.

Prof Kelly said: “It was only when the om­buds­man be­gan to in­ves­ti­gate Lloyds that we started get­ting in­for­ma­tion from the bank.”

Our re­port from April of one of the worst con­veyanc­ing scams

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