Banks missing opportunities to ‘break spell’ of romance scams, says regulator

Banks have sometimes missed opportunities to help “break the spell” of romance scams, according to the City regulator.

The Financial Conduct Authority (FCA) said it had seen examples of banks going to significant lengths to protect those at risk of romance fraud.

But the regulator also uncovered some missed chances to prevent scams.

City of London Police figures suggest more than £106 million was reported lost to romance fraud in the UK in the 2024/25 financial year, with a 9% annual increase in romance fraud reports. It is estimated that, on average, victims lost £11,222 each.

Victims are tricked into sending money to fraudsters who create false romantic relationships or friendships. More than eight in 10 (85%) cases examined by the FCA started online, particularly through social media and dating websites, suggesting platforms have a critical role to play in preventing fraud and reducing harm, the regulator said.

Losses in confirmed romance fraud cases assessed by the FCA ranged from £100 to £428,249.

In its romance fraud review, the FCA set out measures that banks and other payment firms could take to protect their customers – such as better detection and monitoring systems, staff training, early identification of signs of vulnerability, and compassionate aftercare.

The regulator said firms can have difficulty stepping in because victims may be reluctant to accept they are being defrauded. In nearly half (42%) of the cases the FCA reviewed, victims did not disclose the true reason for making a payment when asked.

A key area of improvement is for firms to ensure their staff are trained to spot red flags and critically probe customer explanations, the regulator said. It added that this was not consistent across all firms.

In 15% of the cases reviewed, customers had previously been victims of fraud while banking with the same firm, highlighting the need for tailored protections and ongoing monitoring, the regulator said.

In a quarter (25%) of cases, victims were coerced into getting funds from various sources, including new loans, borrowing from friends and family or liquidating their personal assets.

The regulator identified cases where victims were left in a financially vulnerable situation, with one entering an individual voluntary arrangement (IVA).

In one case in the FCA’s review, someone made 403 payments to a fraudster over the course of a year, resulting in losses of more than £72,000.

Another case involved a victim telling bank staff they intended to send cryptocurrency payments to Iraq, claiming it was the only method accepted by their “partner” in the military.

But it said many firms were providing a high level of support, occasionally exceeding the FCA’s expectations, through compassionate and tailored engagement.

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 FCA said it saw positive examples of banks and payment firms going above and beyond. One firm made 11 calls over a six-week period to support a victim, demonstrating a commitment to breaking the fraudster’s hold and restoring customer confidence, the regulator said.

Another responded with care to a victim who had recently divorced and was supporting a child undergoing cancer treatment, it said. They proceeded to closely monitor the victim’s account.

Highlighting red flags of romance fraud, the FCA said alarm bells should ring if a person who you have only dealt with online asks for money or suggests investments.

Asking for lots of personal information is another potential warning sign.

People can use image checkers to see if the photo of the person they believe they are talking to has been taken from elsewhere.

People should report scams to the police and their bank or building society. Speaking to the account provider as soon as possible may help it to claw back any losses and prevent further payments going out.

Michelle Pilsworth, head of fraud and complaints, Santander UK, said: “Since January, we’ve seen nearly £5.5 million stolen by scammers through romance fraud alone.

“These criminals will invest time in building an emotional connection, before asking for money they’ll claim is needed for food, medical treatment, or an investment opportunity. We’re also increasingly seeing them asking for gift cards.

“The lengths these scammers go to, to earn a consumer’s trust, make these one of the most distressing scams, leaving people feeling emotional and financially vulnerable.

“At Santander, we have a dedicated ‘break the spell’ team, a specialist fraud prevention unit that works with customers who are being manipulated by scammers, particularly in cases of romance scams.

“In the first six months of this year, the team stopped scammers stealing a further £3.5 million from our customers.”

Liz Ziegler, fraud prevention director, Lloyds, said: “Taking advantage of people who are looking for love and companionship, fraudsters play with victims’ emotions when they could be at their most vulnerable.

“Whilst they can be convincing, it’s easy to spot some of the most obvious mistakes these scammers can make. Always take a step back and ask yourself if what they are telling you sounds believable.

“Never in any circumstances, send money to someone you’ve met online. No good relationship starts off in this way, and there aren’t many valid reasons in 2025 why someone can’t speak to you on the phone.

“If you have an older person in your life that is active online, make sure to educate them as best you can on the risks and signs of potential fraudsters looking to take advantage of them.”

Pat Hurley, ombudsman director at the Financial Ombudsman Service (FOS), said: “Over the past year alone, we’ve received hundreds of complaints about romance scams, often involving scammers deceiving victims and gaining their trust using different online platforms like dating sites and gaming apps.

“It’s important that people understand that there is no shame in falling victim to a romance scam. People don’t need to feel embarrassed, there is help available.”

Nick Sharp, deputy director for fraud at the National Crime Agency, said: “Romance fraud affects people not only financially, but also emotionally, with victims often finding it challenging to contemplate that someone they thought they could trust was not what they thought.

“This makes it one of the most harmful types of fraud that victims face and all the more important that all industries take every opportunity to identify such frauds and develop a victim-centred approach.”

Rocio Concha, Which? director of policy and advocacy, said: “Banks and payment providers are on the front line to protect their customers from sending money to fraudsters, so it’s good to see the FCA setting out clear expectations for how these firms should protect their customers.

“The regulator must not hesitate to take action against any firms falling short.”

A UK Finance spokesperson said: “Banks are committed to protecting their customers from romance fraud – they invest significant sums and have teams that are trained to spot warning signs.

“The FCA’s review highlights that a lot of good work is done to keep people safe and prevent this awful crime from taking place.

“Firms will take on board the FCA’s findings and look to make any improvements needed to keep even more people safe.”

The spokesperson added: “We need social media and dating sites to take much greater action to address the problem that begins on their platforms.

“To stay safe, it’s important to be open and honest with your bank when they ask you questions regarding your payments.

“And we encourage everyone to follow the advice of the Take Five To Stop Fraud campaign and contact your bank if you are concerned about being a victim of fraud.”

Published: 17/10/2025 by Radio NewsHub