Banks and payment firms must do more to identify and intervene in cases of romance fraud, the Financial Conduct Authority (FCA) has warned, after finding that victims lost £106 million to such scams last year.

The regulator’s review found that while some banks had gone to “significant lengths” to protect customers, there were widespread missed opportunities to stop suspicious payments – including one case where a victim transferred more than £428,000 to a fraudster.

Romance fraud, which rose 9% last year, involves criminals deceiving victims into sending money by posing as romantic partners or friends, often online.

The FCA said that 85% of cases originated on social media or dating platforms, suggesting that technology companies also have a role to play in tackling the problem.

Steve Smart, the FCA’s executive director of enforcement and market oversight, described romance fraud as a “vicious crime” that can be financially and emotionally devastating.

“All too often it is the vulnerable that fall victim,” he said.

“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.”

UNDER THE SPELL

In nearly half the cases reviewed, victims concealed the real reason for their payments when questioned by bank staff — often because they were “under the spell” of the fraudster and unwilling to accept they were being deceived.

The FCA said firms should strengthen monitoring systems to spot out-of-character transactions and ensure staff receive consistent training to identify red flags and probe customer explanations.

The review also highlighted instances of good practice. In one case, a bank made 11 calls over six weeks to support a customer, helping them to recognise the deception and regain control. Another bank closely monitored an account after a recently divorced customer, caring for a sick child, became a target.

WARNING SIGNS

However, other firms failed to act despite clear warning signs. One victim made 403 separate payments over a year, losing £72,000, without triggering intervention. Another was allowed to send cryptocurrency to Iraq to support a supposed partner “in the military”.

The FCA urged consumers to remain alert to requests for money from online contacts, to verify identities using image searches, and to seek advice from friends or family if something seems amiss.

Victims are encouraged to contact Action Fraud or their bank, which may be able to refund losses of up to £85,000.