FCA Issues Update About How To Prevent And Respond To Romance Fraud

Romance fraud is a growing financial crime, with cases rising by 9% last year. Victims are deceived into sending money to fraudsters who engineer false romantic relationships or friendships. Over 85% of cases start online, particularly through social media and dating websites, suggesting platforms have a critical role to play in preventing fraud and reducing harm.

It's worth noting that under the Online Safety Act 2023, platforms are required to have measures in place to prevent harmful content. The Act also includes provisions aimed at combating issues like sextortion.

However, despite that, figures from City of London Police show that more than £106 million was lost to romance fraud in the UK in the 2024/25 financial year. It is estimated that, on average, victims lost £11,222 each.

The FCA has recently carried out a review regarding romance scams, which sets out measures banks and other payment firms can take to protect their customers. The FCA reviewed a sample of six firms, including retail banks and payment firms, some well-established and others newer to the market. The measures include better detection and monitoring systems, staff training, early identification of signs of vulnerability, and compassionate aftercare.

Key findings

Intervention and prevention are made difficult for firms because victims may be 'under the spell' of the fraudster and 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.

Despite examples of good practice, there were multiple instances of firms missing opportunities to identify seemingly suspicious transactions. This indicated that firms could calibrate their monitoring systems to be more effective.

A key area of improvement is for firms to ensure their staff are trained to spot red flags and critically probe customer explanations. This was not consistent across all firms.

Many firms are providing a high level of support, occasionally exceeding the FCA's expectations, through compassionate and tailored engagement, although this wasn't consistent across all firms.

In one case in the FCA's review, the victim made 403 payments to a fraudster over the course of a year, resulting in losses of over £72,000. The firm's investigation acknowledged that it had not identified the sustained, out-of-character activity.

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.

The FCA also saw positive examples of banks and payment firms going above and beyond. One firm made 11 calls over a 6-week period to support a victim, demonstrating a commitment to breaking the fraudster's hold and restoring customer confidence.

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

Conclusions

The FCA says that its review highlights the critical importance of both effective transaction monitoring systems and skilled, well-trained staff in tackling romance fraud. Firms must continue to ensure their systems can detect relevant risk indicators and that staff are equipped to engage meaningfully with customers, identify red flags and respond appropriately, particularly where customers show signs of vulnerability.

The FCA has engaged directly with the firms in this review to provide detailed feedback. However, it expects all firms to consider these findings and assess if their own systems, controls and customer engagement practices are sufficient to prevent and respond to romance fraud.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.