The Financial Conduct Authority (FCA) has said that banks have missed opportunities to prevent romance scams.

The comments come after the City of London Police revealed in June that romance scams increased by nine per cent in 2024, costing victims £106 million in the UK last year.

In romance scams, victims are tricked into sending money to fraudsters who create fake romantic relationships or friendships.

The regulator has called on banks to improve their approach to romance scams after publishing a review which found that intervention and prevention are often difficult for companies because victims may be “under the spell” of the fraudster and reluctant to accept that they have been scammed.

The FCA reviewed a sample of six firms, including retail banks and payment firms - some well-established and others newer to the market. It focused on how firms detect and prevent romance fraud, and support victims.

In almost half of the cases examined by the FCA, victims did not disclose the true reason for the payment when asked.

The regulator said that, despite some examples of good practice, there were numerous cases where firms missed the opportunity to identify apparently suspicious transactions.

“This indicates that firms could calibrate their monitoring systems to make them more effective,” the FCA said.

In its analysis of romance scams, the FCA outlined a series of measures that banks and other payment companies can take to protect their customers.

These include better detection and monitoring systems, staff training, early identification of signs of vulnerability, and compassionate aftercare.

A key area for improvement is ensuring that firm staff are trained to spot red flags and critically investigate customers' explanations.

“This has not been consistent across firms,” it added.

In one case examined by the FCA, the victim made 403 payments to a fraudster over the course of a year, suffering losses of over £72,000.

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

Steve Smart, executive director of enforcement and market oversight at the FCA, described romance scams as a “vicious crime” that primarily targets vulnerable individuals.

“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,” he said.

The FCA also reminded consumers to be wary if someone they know online asks for money or suggests investments, and to never send money (or crypto-assets or vouchers), no matter how sad their story may be.

It also recommended that internet users look beyond online profiles and be wary of users who ask for too much personal information.

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