The Impact of Fraud on Financial Inclusion in the UK

This paper reveals how payment fraud undermines financial inclusion for low- and middle-income households in the UK. Drawing on a survey of 2,000+ adults from LMI households, it demonstrates that fraud disproportionately impacts those with low financial resilience, erodes trust in financial services and leads to pathways to varying degrees of financial exclusion.

The paper proposes a new framework for understanding victim outcomes and offers actionable recommendations for UK institutions:

• To embed inclusion-based metrics into Consumer Duty assessments for financial firms.
   
• To strengthen system-level monitoring and oversight of victims’ financial inclusion.
   
• To enhance shared fraud and identity data use, with improved oversight and victim protection.
   
• To integrate financial rehabilitation into victim support services.
   
• To improve victim-centric approaches to fraud prevention and response, reducing friction.

These steps aim to bridge payment fraud response and financial inclusion, ensuring victims are not pushed towards exclusion and supporting a more resilient financial system.