Monzo, the UK-based digital bank, is facing scrutiny after data revealed it wrongly denied refunds to a significant number of customers who fell victim to fraud and scams. According to figures from the Financial Ombudsman Service (FOS), Monzo incorrectly rejected over 1,000 fraud and scam complaints closed in 2024 alone.
The complaints encompass a range of fraudulent activities, including authorised push payment (APP) scams, where victims are tricked into transferring funds to criminals, as well as more traditional forms of fraud like chip and pin theft and identity theft.
The FOS data shows Monzo had the highest rate of wrongly rejected fraud complaints among major British banks, incorrectly denying claims in 34% of the 3,372 cases referred to the ombudsman. NatWest followed with a 33% rejection rate from 1,972 complaints, and HSBC with 32% of 2,535 complaints wrongly rejected.
The timing of these rejected claims is noteworthy. Monzo attributes some of the cases to fraud that occurred more than two years ago. However, the high rejection rate raises questions about the bank’s handling of fraud investigations and its initial assessment of customer claims. The bank maintains it has since invested heavily in fraud prevention technology, claiming to have prevented 2.9 times the value of fraud in 2025 compared to the previous year.
The issue comes as fraud continues to surge in the UK, now accounting for an estimated 41% of all crimes in England and Wales as of the year ending September 2024. This makes fraud the most prevalent crime experienced by individuals in the country, highlighting the growing urgency for banks to improve their fraud detection and reimbursement processes.
Consumer rights advocates are critical of the situation. Alex Neill, co-founder and co-chief executive of Consumer Voice, emphasized the emotional and financial toll fraud takes on victims. “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.”
Recent regulatory changes aim to address this issue. In 2024, the UK government introduced a rule mandating banks to refund most victims of APP fraud. While data from UK Finance indicates a 20% decrease in APP fraud cases in 2024 – falling from 232,427 in 2023 to 185,733 – fraudsters still managed to steal £450.7 million, with £267.1 million being paid out in compensation.
Monzo’s struggles with fraud handling are not isolated. The bank faced a £21 million fine in the summer of 2025 from the City regulator over weak financial crime controls. The regulator found that Monzo allowed customers to register accounts using implausible addresses, including prominent locations like 10 Downing Street and Buckingham Palace, as well as the bank’s own headquarters.
Further compounding the challenges, Monzo announced in late 2025 that its chief executive, TS Anil, would step down in February 2026, to be replaced by Diana Layfield, a former Google executive. Anil’s tenure saw Monzo triple its customer base to over 14 million and report a record £60.5 million in pre-tax profit on revenue of £1.2 billion in the year to March 2025.
Despite its growth and profitability, the combination of regulatory scrutiny, fraud handling issues, and leadership transition raises questions about Monzo’s long-term stability and its ability to effectively manage financial crime risks. While Monzo has focused its growth primarily within the UK, and secured a banking license from British regulators in 2016, its valuation has lagged behind competitors like Revolut.
The FOS encourages individuals who believe they have been unfairly denied a refund to first contact their financial provider. If the issue remains unresolved, the FOS offers a free and independent service to review the case. NatWest stated its priority is resolving customer complaints and proactively reaching out to customers in older cases to assist the FOS. HSBC emphasized its compliance with reimbursement regulations and highlighted its success in refunding over 13,000 scam claims and preventing over £130 million in fraudulent transactions in the previous year.
