UK Finance Fraud Report: adapting to the next phase of fraud and scams

Fraud volumes continue to rise across the globe, and UK institutions are in the crosshairs of increasingly sophisticated criminal networks.

UK Finance’s Annual Fraud Report 2026 highlights a troubling reality: while financial institutions continue to prevent significant volumes of fraud, criminals are becoming more skilled at avoiding scrutiny.

In 2025 alone, criminals stole £1.28 billion through payment fraud, representing a 4 per cent year-on-year increase and the second consecutive year of growth. These figures reflect not only the scale of the threat but also the adaptability that new technologies afford organised criminal enterprises.

The most important insight from this year’s report is not solely the total loss figure itself, but the continued shift in how fraud is perpetrated. As institutions adopt stronger fraud controls, criminals are focusing on exploiting human elements. Through AI-enabled social engineering techniques, they manipulate vulnerable customers into authorising payments themselves, bypassing key institutional controls.

This evolution is fundamentally reshaping the fraud landscape. It is no longer solely a device- or transaction-monitoring challenge but increasingly a customer protection one too. Financial institutions must, therefore, rethink how they engage with clients, identify behavioural indicators of manipulation, and detect Authorised Push Payment (APP) scams before funds leave the account.

The 2026 report highlights a growing divergence in fraud typologies. While losses from unauthorised fraud have declined by 5 per cent (£703.4M gross), reflecting continued investment in detection and preventive controls, Authorised Push Payment (APP) scams have grown by 19 per cent (£576.4M gross).

Fraudsters create prolonged, trust-building interactions to convince victims to initiate payments themselves, such as fake romances and investment schemes. They leverage digital channels, compromised credentials, artificial intelligence and real-time manipulation to bypass traditional safeguards, and share resources and playbooks with each other to operationalise these scams on a massive, international level.

This presents a structural challenge: controls designed to detect unauthorised activity are less effective when customers are making an authorised push payment. As a result, the industry has entered a new phase, one where understanding customer behaviour is just as important as identifying criminal anomalies.

The implications for financial institutions are significant. Success can no longer be measured solely by prevention rates. Expectations from regulators, customers and policymakers are expanding to include faster and more accurate intervention in scam scenarios, improved customer outcomes including reimbursement and resolution, and more effective collaboration across institutions, sectors and jurisdictions.

Fraud strategies must evolve to address the changing nature of risk mitigation across four priorities: detecting social engineering in real time; strengthening defences against APP fraud through greater visibility into customer intent, payment context and beneficiary risk; enhancing intelligence sharing and collaboration across institutions, channels and borders; and balancing prevention with response and recovery as reimbursement requirements and customer expectations continue to rise.

Combined, these priorities point to a broader shift from siloed controls towards a more integrated, intelligence-driven approach to fraud prevention, detection and response.

To keep pace with increasingly sophisticated fraud threats, financial institutions need more than incremental improvements — they need a step change in capability. Modern anti-financial crime platforms play a critical role in this shift, enabling organisations to identify risk earlier and intervene before funds are lost forever, using consortium analytics to detect fraudulent payments at scale and provide visibility across originators, beneficiaries and international borders.

As the report highlights, the fraud landscape will continue to evolve. Institutions that succeed will be those that can adapt just as quickly, combining industry insight and collaborative intelligence with the tools needed to act decisively in near real-time.

Author Credit: https://www.ukfinance.org.uk/news-and-insight/blog/uk-finance-fraud-report-adapting-next-phase-fraud-and-scams