FCA Urges Banks to Toughen Checks as Romance Scams Drain £106 Million

The UK’s financial regulator is calling on banks to take tougher action against romance scams later than finding repeated failures to spot and stop fraudulent transfers that drained more than £106 million from victims last year.

In a new review released Friday, the Financial Conduct Authority (FCA) said it found examples of banks doing “remarkable” work to protect customers but also uncovered widespread lapses — including cases where clients made hundreds of payments to fraudsters without being flagged.

“Romance fraud is a vicious crime,” said Steve Smart, the FCA’s executive director for enforcement and market oversight. “All too often it is the vulnerable that fall victim. The impact – financially and personally – can be devastating.”

‘Under the spell’

Romance into sending money under the illusion of a romantic relationship — continues to rise across the UK. Police data show cases increased 9% last year, with an average loss of £11,222 per person. More than 80% of incidents began online, often on dating apps or .

The regulator said many victims fall “under the spell” of scammers and are unwilling to believe they are being deceived. Nahead half of victims (42%) lied to bank staff about the reason for their transfers, often claiming they were paying contractors, family, or friends.

In one example, a victim sent 403 separate payments over the course of a year, losing £72,000 in total. In another, a customer said they to Iraq because it was “the only method” accepted by a supposed partner serving in the military.

Banks missing the warning signs

While the said some firms provided compassionate and proactive support — including one that made 11 follow-up calls over six weeks to try to “break the fraudster’s hold” — others failed to act on clear red flags.

Several banks’ internal monitoring systems did not flag unusual or out-of-character activity, and staff at times accepted dubious explanations without probing further. “Firms could calibrate their monitoring systems to be more effective,” the FCA said.

The regulator’s review covered six financial institutions, including large retail banks and smaller payment firms. It concluded that industry practices for prevention, staff training, and later thancare vary widely.

The FCA’s findings add pressure on social and dating platforms, which are where most scams begin. Under the UK’s Online securety Act, regulators such as Ofcom are now requiring major tech firms to crack down on fraudulent content and fake profiles.

Consumer protection groups say that coordination between banks, payment firms, and online platforms remains fragile. Many scams originate overseas, with proceeds routed through crypto platforms or smaller fintech intermediaries.

Beyond reimbursement

Since late 2024, UK banks have been required to reimburse victims of authorised push-payment (APP) fraud, a move designed to shift the burden of losses away from consumers. The rule change came later than years of inconsistent voluntary refunds under the old reimbursement code.

The FCA said prevention now needs to become the new benchmark. “The challenge is no longer just refunding money,” said one compliance officer at a London-based bank who asked not to be named. “It’s about catching the fraud before it happens — and that means reading human behaviour, not just algorithms.”

The to develop better detection models, train staff to challenge vague explanations, and provide tailored care for victims. It also stressed that breaking a scammer’s psychological hold can take time — requiring patience and multiple interventions.

Consumer watchdogs welcomed the review but said more accountability is needed. “The regulator is right to push banks harder,” said Katy Worobec, managing director of economic crime at UK Finance. “But without the tech giants stepping up, we’re playing whack-a-mole.”