Some firms in the payment sector are leading the way in how they support victims of romance fraud, showing that meaningful, tailored care is not only achievable but can play a vital role in reducing harm. That’s according to the regulator the FCA (Financial Conduct Authority) in its review of how numerous firms in the sector go about handling romance fraud.
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.”
Examples
Despite examples of good practice, the regulator found that many firms were unaware of how customers could be vulnerable. The FCA calls on payment firms to set up systems and processes in ways that support and enable vulnerable customers to disclose their needs. One firm allowed customers to disclose vulnerabilities via its mobile banking app. In other cases, family members reported the fraud and the customer’s vulnerabilities, but firms were reluctant to act, citing the individuals as non-authorised third parties. In one example, a victim’s father reported the fraud and underlying vulnerabilities to a local branch, but no action was taken. The fraud continued for nearly 18 months, resulting in a total loss of £121,000.
The FCA also questions the capability of staff to identify ‘red flags’ and critically assess customer explanations. This was not consistent across all firms, the regulator found. ‘Red flags’ may include unusual customer behaviour, sudden changes in personal circumstances or a desperate tone in communications. Strong detection systems must be supported by experienced staff who can intervene, the FCA says. In one case, a victim made 15 international payments via a branch, totalling £190,000. The victim claimed they were buying property in their country of origin, but staff did not seek documentation or question the use of multiple accounts in different names.
Financial sector surveyed
Most firms in the UK financial sector say they are ‘concerned’ about fraud risk, and of those, most have increased investment in fraud mitigation over the past 18 months, according to the business data firm Dun & Bradstreet having surveyed credit risk and compliance people. It found that near half are still relying on largely manual processes to assess and monitor third-party risk. Near half say their companies are looking to search engines or AI tools like ChatGPT to fill gaps in their internal data and support risk assessing. Sara de la Torre at the firm said: “It’s encouraging to see so many firms stepping up investment to combat fraud and other risks, but there is still more to do.”
Conveyancing fraud warning
City of London Police and Action Fraud, the national reporting centre for fraud and cyber crime, are warning the public about a rise in payment diversion fraud – more commonly known as conveyancing fraud. Criminals gain access to email chains between property buyers, sellers, solicitors, and estate agents. Once inside, they impersonate a trusted party and send convincing messages requesting that funds, such as deposits or final payments, be transferred to bank accounts under their control. These scams are often timed to coincide with the final stages of a transaction, when large sums are expected to be moved quickly. As in other kinds of frauds, fraudsters apply psychological pressure, claiming urgency, seeking to convince victims that delays could jeopardise the deal. Such frauds have also been reported in rental agreements and probate transactions, where funds are transferred as part of estate settlements.
Detective Superintendent Oliver Little, from the Lead Force Operations Room at the City of London Police, said: “Conveyancing fraud is a deeply invasive crime that strikes at a moment when people are making one of the biggest financial decisions of their lives. Criminals exploit trust and urgency to divert life-changing sums of money into their own accounts, leaving victims devastated – both financially and emotionally.
“We’re urging anyone involved in property transactions to stay alert, verify payment requests directly, and treat any last-minute changes to bank details as a red flag. Any genuine solicitor or firm will never pressure you in to sending money quickly.”
Victims were mainly aged 30 to 49, men and women; reports came from across the UK.
What to do
If you become the victim of conveyancing fraud, call your bank at once using the number on the back of your bank card and report it to Action Fraud online at http://actionfraud.police.uk or by calling 0300 123 2040. If you’re in Scotland, you can report it to Police Scotland on 101, the non-emergency phone line.
