24.11.2017

Regulatory Update- Customer Complaint 23/08/2016

Regulatory Update- Customer Complaint 23/08/2016

A consumer complains that an adviser won’t pay back money transferred to fraudsters from investment bond after her email was hacked. Ms Q received a letter from the provider of her investment bond, confirming £250,000 had been withdrawn. However she hadn’t made a withdrawal. She was shocked and phoned her financial adviser and he said he’d processed the transaction after arranging it with her by email which she didn`t get.

Ms Q and the adviser came to the conclusion that her email account must have been hacked. So the emails the adviser had received had been coming from Ms Q’s address, but someone hadn’t sent them herself. And the bank account the fraudsters had given to transfer the money to although it was in Ms Q’s name it wasn’t actually her own account.

After reporting the fraud to the police, Ms Q managed to recover around £170,000. They offered to pay 25% of the money she’d lost. Ms Q didn’t think this was enough and contacted FOS.

FCA asked the adviser to send us the emails they’d exchanged with the fraudsters who were pretending to be Ms Q – as well as the adviser’s records of their contact with the investment provider.

FCA saw that the fraudsters had initially provided details for a solicitor’s bank account in Hong Kong. The investment provider had told the adviser they couldn’t trace the solicitor’s firm, so they wouldn’t transfer the money to the account.

The adviser had emailed “Ms Q” to let her know and “Ms Q” had replied with details of an account in her name, with a UK high street bank. In processing this second request for the funds to be withdrawn, the investment provider highlighted that the account details were different to what they had on their records for Ms Q, but the adviser confirmed the details were correct and confirmed the transaction.

FCA thought alarm bells should certainly have started ringing when the investment provider said they couldn’t trace the firm of solicitors. We found it hard to see why, at that point, the adviser hadn’t phoned Ms Q.

The FCA decided the adviser could have stopped the fraud happening if only the phoned Ms Q.

*Source: Compliancy Services Ltd 

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