Monzo Wrongly Denied Refunds to Thousands of Fraud and Scam Victims
Monzo has wrongly denied refunds to thousands of fraud and scam victims, according to data obtained by .
The digital-only bank rejected over 1,000 fraud and scam complaints that were closed in 2024, as revealed by figures from the Financial Ombudsman Service (FOS).
These complaints include cases involving Authorised Push Payment (APP) scams, chip and pin fraud, and identity theft.
Last year, Monzo was found to have made incorrect decisions in 34% of the 3,372 cases referred to the FOS, the highest proportion among major British banks receiving the most complaints.
NatWest ranked second, with 33% of 1,972 fraud complaints wrongly rejected, followed by HSBC at 32% of 2,535 complaints.
There is usually a delay between the occurrence of fraud, the customer lodging a complaint with the bank, and the FOS processing escalated cases. A Monzo spokesperson noted that some cases related to fraud incidents that occurred more than two years ago.
“Since then, we have continued to invest in technology to stop fraud before it impacts our customers – and it’s working. We prevented 2.9 times the value of fraud in 2025 compared to the year before.”
Fraud Prevalence and Consumer Impact
Fraud has become the most commonly experienced crime in the UK, accounting for a significant proportion of crime in England and Wales in the year ending September 2024.
Alex Neill, co-founder and co-chief executive of the consumer rights organisation Consumer Voice, highlighted the additional distress faced by victims when disputing complaints with their banks.
“People who’ve been scammed aren’t just out of pocket, they are often left feeling worried and ashamed,” she said. “Firms need to play their part and make reimbursement fair, fast and consistent, without forcing victims into a long fight for answers.”
Regulatory Changes and Industry Data
In 2024, the UK government introduced a rule requiring banks to refund most victims of APP fraud who were tricked or manipulated into transferring money to criminals.
UK Finance, representing the banking industry, reported 185,733 APP cases in 2024, a 20% decrease from the 232,427 cases recorded in 2023. Fraudsters stole £450.7 million from victims in 2024, while £267.1 million was paid out in compensation.
A Financial Ombudsman Service spokesperson stated that they receive hundreds of fraud and scam cases weekly from victims.
Monzo’s Growth and Regulatory Challenges
Monzo, an online-only bank launched in 2015 amid the rise of challenger banks such as Revolut and Starling, was valued at £4.5 billion in October 2024 when employees sold stock to existing investors.
Although Monzo’s valuation trails behind Revolut’s, it has concentrated its growth in the UK and obtained a banking licence from British regulators in 2016.
However, last summer Monzo was fined by the City regulator for weak financial crime controls after allowing customers to register accounts with implausible home addresses, including 10 Downing Street, Buckingham Palace, and Monzo’s own headquarters.
Several months later, Monzo announced that its chief executive, TS Anil, who led the company for nearly six years, would step down in February. He will be succeeded by Diana Layfield, a former Google executive.
Under Anil’s leadership, Monzo tripled its customer base to over 14 million and reported a record £60.5 million in pre-tax profit for the year ending March, with revenue reaching £1.2 billion.
Responses from Financial Ombudsman and Banks
A Financial Ombudsman Service spokesperson advised victims of scams to first contact their financial provider. If dissatisfied with the bank’s response, they should escalate the complaint to the FOS, which offers a free and independent service.
A NatWest spokesperson stated that their priority is resolving complaints directly with customers and that the bank proactively contacts customers in historic cases to assist the FOS in clearing complaint backlogs. They also work closely with the ombudsman to ensure fair outcomes.
An HSBC spokesperson said:
“We fully comply with our regulatory obligations around the mandatory reimbursement of scams. Last year, we refunded over 13,000 scam claims and prevented over £130m being defrauded from our customers.
Financial Ombudsman Service data reflects only the small proportion of cases that were referred to the ombudsman and does not capture the customers we successfully help each year through early intervention, reimbursement, and support.”
