The warning shot from the regulator follows a review of firms’ fraud controls and complaint handling. While the review found examples of good practice, the watchdog expresses disappointment with the way some firms supported customers who were the victims of fraud. In the first six months of 2023 over 116,000 people reported falling victim to APP fraud, where someone is tricked into sending money to a fraudster posing as a genuine payee. The latest fraud report by UK Finance showed that over £152 million was returned in total by the banking sector to victims in the first half of this year.However, recent figures published by the Payment Systems Regulator found a wide disparity in the way some banks treat victims, with new challengers such as Monzo and Starling scoring particularly poorly.The FCA says banks are not fully considering characteristics of customer vulnerability when making decisions about fraud claims and complaints. The watchdog says customers were provided with decision letters that were sometimes unclear, confusing, or included unhelpful and, on occasion, accusatory language.The FCA says it is pressing banks to improve their anti-fraud systems and controls and review complaint-handling procedures to ensure better outcomes for customers. "We are already working with firms in our review to strengthen their approach," states the FCA. "We expect all payment service providers to use our findings 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."