Monzo, the digital-only bank, has been found to have wrongly denied refunds to thousands of victims of fraud and scams, according to data from the Financial Ombudsman Service (FOS). The Guardian reveals that Monzo incorrectly rejected more than 1,000 fraud and scam complaints that were closed in the last year alone.
High Rates of Wrongful Rejections Among Major Banks
Last year, Monzo was deemed to have made the wrong call in 34% of its 3,372 cases referred to the FOS, marking the highest rate among British banks receiving the most complaints. NatWest ranked second, with 33% of 1,972 fraud complaints wrongly rejected, and HSBC came in third, wrongly rejecting 32% of 2,535 complaints.
Impact on Fraud Victims
Fraud and scam complaints can arise from various incidents, including authorised push payment (APP) scams, chip and pin fraud, and identity theft. Alex Neill, co-founder and co-chief executive of Consumer Voice, highlighted the distress victims face when making complaints against 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 Context and Industry Response
In 2024, the government introduced a new rule requiring banks to refund most victims of APP fraud. UK Finance reported 185,733 APP cases in 2024, down 20% from 2023, with fraudsters taking £450.7m and £267.1m paid out in compensation. A spokesperson for Monzo noted that some cases involved fraud from over two years ago and stated, "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."
Broader Banking Issues and Recent Developments
Monzo, launched in 2015 as part of a wave of challenger banks, was valued at £4.5bn in October 2024. However, last summer, the bank was fined £21m by the City regulator for weak financial crime controls, including allowing accounts with implausible addresses. In a surprise move, CEO TS Anil will step down in February, to be replaced by former Google executive Diana Layfield. Under Anil's leadership, Monzo tripled its customer base to over 14 million and reported a record £60.5m pre-tax profit in the year to March.
Ombudsman and Bank Statements
A FOS spokesperson advised victims to first speak to their financial provider and then contact the ombudsman if unsatisfied. NatWest stated its priority is resolving complaints initially and working with the FOS to clear backlogs. HSBC emphasized its compliance with reimbursement obligations, noting it refunded over 13,000 scam claims last year and prevented over £130m in fraud, adding that FOS data only reflects a small proportion of cases.
Fraud remains the most commonly experienced crime in the UK, accounting for an estimated 41% of offences in England and Wales. The FOS receives hundreds of fraud-related cases weekly, underscoring the ongoing challenge for consumers and banks alike.
