Lloyds to repay defrauded couple £47,000

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

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