FRAUDSTERS have plunged Islanders into what the financial watchdog described as the “most significant issue” of the decade, with nearly £2 million awarded in compensation as complaints soar across Jersey and Guernsey’s financial sectors.
The stark warning comes in the Channel Islands Financial Ombudsman’s 2025 Annual Report, which paints a troubling picture of sophisticated scams, frozen bank accounts, rising legal challenges and mounting public distrust in financial institutions.
Chief executive and principal ombudsman Douglas Melville said fraud had become “the most significant and impactful complaint theme during the year” amid “increased fraud, greater challenge to Ombudsman outcomes, and rapid technological change”.
The report reveals fraud cases exploded from just 21 in 2022 to a peak of 91 in 2024 before easing slightly to 61 last year. Fraud accounted for 15% of all cases resolved by the ombudsman in 2025.
“In many ways, fraud was our defining theme for 2025,” the report said. “The amounts of money stolen, the impact on people’s lives, and the distressing stories we heard from customers made it the most significant issue we have dealt with so far this decade.”
The ombudsman handled 571 complaints in total last year, opening 405 formal cases and closing 403. Around 60% were settled informally, while compensation awards totalled £1.97 million – although the report notes actual settlements were “a multiple of this figure” because many agreements remain confidential.
Banking disputes dominated the watchdog’s workload, making up 64% of all complaints. Around 14% of cases involved customers having accounts frozen or closed, often without clear explanations from banks.
The report criticised delays and poor communication by some banks, warning that customers were sometimes left in limbo “even when the customer had done nothing wrong”.
One case detailed how a couple lost £4,750 after being duped into revealing a one-time passcode to fraudsters posing as bank staff. The ombudsman ruled the bank had failed to provide adequate warnings and ordered compensation to be paid.
In another case, however, a woman who lost £24,000 after ignoring repeated warnings and granting scammers remote access to her devices and was left to bear the loss herself.
The report also highlighted growing hostility towards the ombudsman itself. Complaints challenging CIFO decisions and Data Subject Access Requests both increased sharply in 2025, with 91% of service complaints stemming directly from complainants disputing outcomes.
Board chairman Antony Townsend warned the organisation now faced a “more complex” risk environment driven partly by artificial intelligence and rising legal threats.
He said the widespread adoption of artificial intelligence had contributed to “higher volumes of data subject access requests, service complaints and judicial review threats”.
Despite the mounting pressures, the ombudsman insisted it remained committed to “fair, independent and expert complaint resolution” across the Channel Islands’ financial sector.
In Saturday’s JEP, Kerry Petulla, executive director of enforcement, intelligence and financial crime at the Jersey Financial Services Commission, warned that prevention is a growing challenge stemmed from the pace of technological change, including the development of generative artificial intelligence.
We’re seeing legitimate businesses or individuals who are being impersonated,” she said. “I myself was impersonated last year in an email that was circulated to industries in respect of some enforcement action that was being taken. A lot of scams that we’re reporting at the moment are impersonations of local Jersey businesses.”
