FCA Publishes Results of Fraud Controls and Complaints Handling Review

The FCA has issued a press release and a report following a review of certain firms’ fraud controls and complaint handling. Although the report found examples of good practice, the FCA was disappointed with the way some firms supported customers who were the victims of fraud. The review, and report, focus on Authorised Push Payment (APP) fraud, but several of the findings and FCA’s comments can be applied to any firm in relation to financial crime controls.

Over 116,000 people reported falling victim to APP fraud in the first six months of 2023 according to the UK Finance Half Year Fraud Update. This was exacerbated by more people struggling with the increased cost of living, leaving them exposed to more potential vulnerabilities.

Other key findings from the review concluded that:

• Firms can do more to strengthen their systems designed to detect and prevent fraud.
• Management information and actions are often focused on commercial risk appetite, rather than customer impact and treatment.
• There is not enough focus on delivering good consumer outcomes in many firms.
• Some firms could do more to improve the support they offer to victims of fraud.
• Poor complaint handling, including firms often taking too long to respond. Customers were provided with decision letters that were sometimes unclear, confusing, or included unhelpful and, on occasion, accusatory language.
• Firms are not fully considering characteristics of customer vulnerability when making decisions about fraud claims and complaints.

The FCA is already working with firms to strengthen their approach to tackling fraud. The regulator expects all payment service providers to use the findings from the report to inform what more they can do to detect, manage, and reduce fraud and losses more effectively.

Customer treatment must also be improved, including how complaints are handled, to deliver consistently good consumer outcomes in line with the Consumer Duty.