Monzo wrongly denied refunds to thousands of fraud and scam victims | Monzo bank
Monzo mistakenly refused refunds to thousands of victims of scams and scams, the Guardian can reveal.
The digital-only bank incorrectly dismissed more than 1,000 fraud and fraud complaints closed last year alone, according to data from the Financial Ombudsman Service (FOS).
Fraud and scam complaints can come from victims of authorized instant payment (APP) fraud, as well as chip and pin fraud and identity theft.
Last year Monzo was deemed to have made the wrong decision in 34% of 3,372 cases referred to FOS. This was the highest rate among the British banks that received the most complaints.
NatWest came in second place, admitting it mistakenly dismissed 33% of 1,972 fraud complaints, while HSBC came in third place, admitting it wrongly dismissed 32% of 2,535 complaints.
There is normally a delay between the fraud occurring, the customer complaining to the bank and the FOS then processing the escalating complaints. A spokesperson for Monzo said some of the cases were related to fraud that occurred more than two years ago.
They said: “Since then, we’ve continued to invest in technology to stop fraud before it impacts our customers, and it’s working. In 2025, we’ve increased the value of fraud by 2.9x compared to the previous year.”
Fraud has become the most common crime in the UK. estimated 41% of all crimes In England and Wales in the year ending September 2024.
Alex Neill, co-founder and co-director of consumer rights organization Consumer Voice, said victims of scams and scams often face further distress when making complaints against their banks.
“People who are defrauded are not only left out of pocket, they are often worried and embarrassed,” he said. “Firms need to do their part and provide reimbursement fairly, quickly and consistently, without forcing victims into a long fight for answers.”
In 2024, the government introduced a new rule requiring banks to refund most victims of APP scams who were tricked and manipulated into transferring money to criminals.
UK Finance, an organization that represents the banking industry, found there were 185,733 APP cases in 2024, down 20% from a peak of 232,427 in 2023. Overall, scammers took £450.7 million from their victims in 2024, with £267.1 million paid out in compensation.
A spokesman for the FOS said it received hundreds of cases a week from people who had fallen victim to scams and scams.
Online-only Monzo launched in 2015 as rival banks such as Revolut and Starling joined the industry. It was valued at £4.5 billion in October 2024, when employees sold shares to existing investors.
Although its valuation lags significantly behind Revolut, Monzo has focused most of its growth on the UK and received a banking license from British regulators in 2016.
But last summer the bank was fined £21 million by the City regulator for weak financial crime controls after allowing customers to sign up for accounts with “preposterous” home addresses including 10 Downing Street, Buckingham Palace and Monzo’s own headquarters.
A few months later, Monzo made the surprise announcement that its CEO TS Anil, who had led the company for almost six years, would resign in February. He will be replaced by former Google executive Diana Layfield.
Under Anil’s leadership, Monzo tripled its customer base to over 14 million. The bank reported a record pre-tax profit of £60.5 million on revenue of £1.2 billion in the year to March.
An FOS spokesman said if someone was the victim of a scam they should first speak to their finance provider. “If they feel they are being treated unfairly by their bank, they should first complain to the business, then contact our free, independent service and we will see if we can help,” they said.
A spokesman for NatWest said its priority was to resolve customers’ complaints in the first instance and that it was acting proactively. He reached out to customers on historic cases to help the FOS clear its backlog of complaints and worked closely with the ombudsman to ensure fair outcomes for its customers.
A spokesperson for HSBC said: “We are fully compliant with our regulatory obligations regarding the mandatory refund of frauds. Last year, we refunded more than 13,000 fraudulent claims and prevented more than £130 million from being defrauded from our customers.
“Financial Ombudsman Service data reflects only a small proportion of cases referred to the ombudsman and does not include the clients we successfully assist each year through early intervention, reimbursement and support.”
