Banks Urged to Help Tackle Rising Romance Scams

The Financial Conduct Authority (FCA) has called on banks and payment firms to strengthen their defences against romance scam fraud after uncovering serious shortcomings in how the sector identifies and prevents this growing form of financial crime. Despite positive examples of firms intervening effectively, the regulator found repeated instances where opportunities to stop fraud were missed, leaving victims facing devastating losses.

Romance fraud cost victims £106 million in the UK last year, according to figures from the City of London Police, with reported cases rising by 9%. Victims, often emotionally manipulated by fraudsters posing as romantic partners, are deceived into transferring money or crypto assets under false pretences. The FCA’s review revealed that in some cases, victims made hundreds of payments to fraudsters, while one individual lost over £428,000.

The FCA found that 85% of cases began online, particularly via social media and dating platforms, underscoring the critical role technology companies play in tackling this crime. However, the regulator’s primary focus was on how financial institutions can enhance their internal systems and customer engagement to better detect and disrupt these scams.

Among the measures outlined in the review are improvements to transaction monitoring systems, enhanced staff training to spot red flags, early identification of vulnerable customers, and more consistent delivery of compassionate aftercare. The FCA also urged firms to adopt a more proactive stance in challenging unusual payment behaviour, as almost half of the victims reviewed (42%) did not disclose the real reason for their transfers when questioned.

Steve Smart, Executive Director of Enforcement and Market Oversight at the FCA, said:

Romance fraud is a vicious crime. All too often it is the vulnerable that fall victim. The impact – financially and personally – can be devastating. We recognise the challenge banks and payment firms have in combating this complex crime and this review aims to help them stay one step ahead of the criminals. We also all need to be on guard so we can protect ourselves and loved ones by recognising the romance fraud red flags.

The review also highlighted examples of good practice across the industry. In one case, a bank made 11 follow-up calls over six weeks to help a victim regain control and confidence. Another institution closely monitored a customer’s account after learning they were recently divorced and caring for a sick child, demonstrating the value of empathetic and tailored customer care.

The FCA’s findings make clear that human judgement and compassion must complement technology-driven monitoring. Firms that balance both are best placed to protect customers from emotional and financial harm.

Read the press release here.