FCA Review Exposes Gaps in Romance Fraud Controls

Introduction

The Financial Conduct Authority (FCA) has released a striking new multi-firm review on romance fraud, exposing widespread weaknesses in how banks and payment firms detect and prevent one of the fastest-growing forms of Authorised Push Payment (APP) fraud.

The report, Combating Romance Fraud – Prevention, Detection and Supporting Victims (October 2025), shows that many institutions failed to spot clear warning signs before victims lost thousands of pounds. It calls for stronger monitoring systems, better staff training, and a more compassionate approach to supporting those affected.

Romance Fraud at a Record High

Romance fraud happens when a victim is deceived into believing they are in a genuine relationship and is persuaded to send money to a criminal.

According to the FCA’s findings, reports of romance fraud increased by 9 percent in 2024 to 2025, with total losses exceeding £106 million and an average loss per victim of £11,222. The true figure is likely far higher, as many victims never report the crime due to shame or embarrassment.

The regulator warns that fraudsters are becoming more sophisticated, often developing a working knowledge of banking systems and how to evade detection.

What the FCA Reviewed

The FCA examined six banks and payment firms, reviewing 60 confirmed romance fraud cases with losses ranging from £100 to £428,000. It assessed how effectively firms detected and prevented fraud and how they treated victims once the deception was discovered.

While some firms demonstrated strong systems and compassionate aftercare, others missed key opportunities to stop fraudulent transactions or failed to recognise when customers were at risk.

Key Findings from the Review

1. Missed Red Flags

Many banks failed to identify suspicious activity, including repeated payments to new or overseas accounts, sudden increases in transaction values, or behaviour inconsistent with a customer’s history.

In one case, a victim made 403 separate payments totalling £72,000, which went undetected. In another, over £131,000 was sent abroad without triggering an alert.

2. Challenges in Detection

Around 85 percent of romance frauds began online, through social media or dating platforms. Fraudsters typically build trust over time, starting with small payments before escalating to large transfers.

Victims often give false explanations to their banks when questioned, sometimes under the influence of the fraudster. This makes detection even harder, particularly when firms rely on automated systems without adequate human review.

3. Inconsistent Victim Support

The FCA found major differences in how banks supported victims. Some showed proactive, compassionate engagement, including follow-up calls, educational materials, and referrals to charities.

Others missed crucial opportunities to intervene, even when customers displayed clear signs of emotional distress or coercion. The FCA reminded firms that under the Consumer Duty, they must act in good faith and take reasonable steps to prevent foreseeable harm.

4. Vulnerable Customers Need Greater Protection

Firms that performed well had specialist vulnerability teams, used account markers to identify at-risk customers, and implemented enhanced monitoring or transaction limits after a fraud was confirmed.

However, many firms only became aware of a customer’s vulnerabilities after the fraud occurred, limiting their ability to act early. In some cases, firms failed to escalate safeguarding concerns even when victims expressed suicidal thoughts or reported threats from the fraudster.

5. Staff Training and System Gaps

The FCA highlighted that technology alone cannot stop romance fraud. Even advanced transaction-monitoring systems rely on well-trained staff who can recognise red flags and ask the right questions with sensitivity and persistence.

In several cases, staff relied too heavily on scripted conversations, failed to challenge implausible stories, or lacked confidence in probing customer explanations.

Examples of Good Practice

The review also showcased firms that are leading the way. Positive examples included:
• Requiring customers to speak with a staff member before confirming high-risk payments
• Investigating new cryptocurrency transactions for signs of coercion
• Using data points such as previous fraud history and dating-site spending to flag risk
• Providing long-term follow-up and emotional support to help victims regain confidence

These examples demonstrate that meaningful, tailored care is achievable and can dramatically reduce financial and emotional harm.

Education and Prevention

Several firms have launched public awareness campaigns, app-based learning modules, and real-life case studies to help customers recognise romance scams. The FCA encourages wider adoption of such measures, noting that prevention and early intervention are the most effective ways to protect consumers.

What the FCA Expects Next

The FCA expects all payment firms to:
• Review their fraud-monitoring systems and recalibrate thresholds where needed
• Strengthen staff training to spot social engineering and behavioural red flags
• Improve communication and aftercare for victims
• Take a proactive approach to identifying and supporting vulnerable customers
• Work collaboratively across the financial sector and with law enforcement to share intelligence and prevent repeat victimisation

Beyond the Numbers

Romance fraud is not just a financial issue. Victims experience deep emotional and psychological trauma that can persist long after the money is gone. The FCA’s review makes clear that preventing and responding to this type of crime requires human empathy as much as technical expertise.

Final Thoughts

The FCA’s 2025 review sends a clear message: banks must go beyond compliance and take a genuinely customer-focused approach to tackling romance fraud.

For financial professionals, forensic investigators, and compliance specialists, this report offers a detailed blueprint for how systems and staff can work together to identify red flags earlier and support victims more effectively.

References:

• Financial Conduct Authority (2025). Combating Romance Fraud – Prevention, Detection and Supporting Victims.

• The Guardian (17 October 2025). Banks need stricter controls to prevent romance fraud, says City regulator.