Combating Romance Fraud - FCA's Expectations
TLT picks out the key points you shouldn't miss...
What’s this about?
On 17 October 2025, the Financial Conduct Authority (FCA) published its multi-firm review into romance fraud, identifying significant risks for Payment Service Providers (PSPs) and their customers. The review revealed that fraud losses exceeded £100 million in the previous year, with firms falling short in key areas including transaction monitoring, customer support, and safeguarding vulnerable individuals.
Assessing practices across six firms, the FCA highlighted systemic gaps in fraud detection protocols, staff responsiveness, and the handling of customer vulnerability. The report sets out clear regulatory expectations and urges firms to strengthen their systems and controls to better prevent, detect, and respond to romance fraud.
Our Head of Risk and Financial Crime, Ben Cooper says…
“The FCA’s multi-firm review of how firms deal with romance frauds provides useful insights that firms can use to assess their own systems and controls plus customer engagement strategies to combat such this type of fraud.”
Detection and monitoring
Good practice identified by the FCA
- Manual intervention for high-risk payments: Some firms demonstrated effective risk management by deferring high-risk payments for manual review and temporarily blocking transactions. This “positive friction” in the payment process helped prevent fraud by ensuring staff intervention before funds are released.
- Proactive use of data: Firms leveraged a range of data points to flag suspicious activity on customer profiles. Markers included previous victimisation, attempts to pay high-risk beneficiaries, and spending patterns on dating sites.
Areas for improvement
- Missed opportunities: The FCA observed that some firms failed to investigate suspicious transactions, such as high-value oversea payments where there was no prior history, or sudden spikes in transaction amounts.
- Overlooking financial distress: Firms should consider that unusual borrowing or signs of financial distress may indicate romance fraud, especially when combined with other risk factors.
Internal investigative approaches and staff capabilities
Good practice identified by the FCA
- Victim-centred investigations: The FCA highlighted the importance of a victim-centred approach, involving thorough case analysis, comprehensive information gathering, and consideration of underlying vulnerabilities.
- Proactive prevention: Some firms took further steps to prevent further harm by adding fraudster to internal blocklists.
Areas for improvement
- Incomplete payment analysis: Many firms focused primarily on Faster Payments, neglecting other transaction types such as cash withdrawal, card transactions, and gift card purchases. This contributed to a limited understanding of romance fraud.
- Lack of victim education: Victims were often not informed about reimbursement policies for alternative payment types.
- Staff training gaps: The FCA found that some staff lacked the training or confidence to critically assess customer explanations or identify red flags, such as unusual behaviour or sudden changes in circumstances. Staff should be empowered to probe further when risk indicators are present.
Customer engagement and support
Good practice identified by the FCA
- Effective victim engagement: Firms that engaged thoughtfully with victims – building rapport, providing tailored education, conducting follow up calls, and supporting verification of fraudster claims - were more successful in preventing further losses. Compassionate Aftercare: The FCA commended firms that offered aftercare and referrals to charities, demonstrating a commitment to supporting victims beyond the initial incident.
Areas for improvement
- Delayed escalation: Some firms failed to escalate safeguarding concerns promptly, missing opportunities to protect vulnerable customers
Treatment of customers in vulnerable circumstances
Good practice identified by the FCA
- Holistic approach: Firms which recognised broader contexts (emotional distress, social isolation, lack of support) were better able to tailor interventions and reduce the risk of re-victimisation.
- Use of vulnerability markers: Adding markers to customer profiles enabled enhanced safeguards and earlier intervention.
- Specialist teams: Some firms established dedicated teams to support vulnerable customers
- Protective measures: In areas of significant concern, firms applied temporary account restrictions or used the Banking Protocol to alert police and prevent further losses.
- Engagement with third parties: Where formal third-party authorisation was absent, but concerns existed about a customer’s understanding or decision-making, some firms appropriately engaged with family or friends, while maintaining data protections obligations.
Areas for improvement
- Breaking the fraudster’s influences: The FCA acknowledged the difficulty in breaking the psychological hold of fraudsters but emphasised the need for early intervention and stronger frontline staff awareness.
Education and awareness
Good practice identified by the FCA
- Targeted campaigns and resources: Firms provided targeted educational campaigns, real-life examples, and resources to help customers recognise and avoid romance fraud.
- Innovative learning tools: Some firms developed fraud awareness modules within mobile apps and conducted research surveys to inform customers about warning signs.
Areas for improvement
- Over-reliance on passive messaging: The FCA noted that relying solely on website content or passive messaging is insufficient to reach and alert customer at risk.
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