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Monzo Bank Limited: Failures To Adhere To Dispute Resolution Regulations (DISP)

Monzo Bank Limited is a “leading” Neo-bank that is failing to adhere to basic financial regulations. We’ll explain how in this article.

Monzo Bank Limited logo associated with failures to adhere to basic Dispute Resolution Regulations.
Monzo Bank Limited logo associated with failures to adhere to basic Dispute Resolution Regulations.
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September 21, 2024

Monzo Bank Limited, a prominent UK-based digital-only bank founded in 2015, has been widely praised for revolutionising banking with its mobile-first, user-friendly approach. With millions of customers and a reputation built on transparency and innovation, Monzo has become a leader among challenger banks. However, beneath the surface of its sleek app interface and bright coral cards, serious concerns have emerged regarding its compliance with UK financial regulations—particularly in its handling of disputes and the fair treatment of vulnerable customers.

This article explores growing allegations that Monzo is failing to meet its obligations under key UK regulatory frameworks, including the Financial Conduct Authority’s (FCA) Principles for Businesses, DISP (Dispute Resolution: Complaints) rules, and guidelines surrounding the fair treatment of vulnerable customers.

Background: Monzo's Rise and Consumer Base

Monzo Bank began as a prepaid card provider and swiftly evolved into a fully licensed bank in 2017. Its appeal among younger, tech-savvy consumers allowed it to scale rapidly. As of 2025, Monzo reportedly has over 9 million customers and offers a broad suite of services, including current accounts, savings pots, personal loans, and business banking.

Despite its rapid growth and accolades, Monzo’s regulatory record is increasingly coming under scrutiny—particularly in relation to complaint handling and its treatment of financially or personally vulnerable individuals.

Complaint Handling Failures: Breach of DISP Rules

The FCA’s Dispute Resolution (DISP) sourcebook sets clear guidelines that UK financial institutions must follow when handling customer complaints. Central to these rules is the requirement that firms must provide:

  • A final response to complaints within eight weeks;
  • Prompt updates and reasonable justification for any delays; and

However, numerous reports have emerged of Monzo taking far longer than eight weeks—in some cases, more than 13 weeks, and alarmingly, even over 52 weeks (one year)—to respond to formal complaints. Such delays not only breach DISP regulations but can also severely exacerbate distress and financial hardship, especially for vulnerable customers who rely on timely resolution to access funds or correct account issues. This was the same in our experience with multiple clients’ cases whereby one case took them 64 weeks to respond to.

For instance, users on the Monzo Community forum have shared experiences of prolonged complaint handling times, with one user stating:

I've already referred it to the ombudsman. All Monzo keep saying is that they will get back to me asap but it isn't good enough.

Monzo Community User Tweet

Failure to Uphold Fair Treatment of Vulnerable Customers

Perhaps more concerning are allegations that Monzo has failed to uphold its duties regarding the fair treatment of vulnerable customers, as defined by the FCA’s FG21/1 guidance (“Guidance for firms on the fair treatment of vulnerable customers”).

The FCA outlines that vulnerable customers may be affected by a wide range of circumstances, including:

  • Poor mental health
  • Physical disability
  • Severe financial hardship
  • Bereavement or trauma
  • Cognitive limitations

Banks are expected to recognise signs of vulnerability and take approbate steps to ensure such customers are not disadvantages, marginalised, or ignored. Yet, numerous individuals (including our organisation) have reported instances in which Monzo:

  • Failed to respond to urgent, vulnerability-flagged complaints.
  • Closed or froze accounts without providing support or escalation options.
  • Refused to engage with customers flagged as having mental health challenges.
  • Failed to provide reasonable adjustments, such as simplified communication methods or the use of third-party advocates.

In doing so, Monzo may be violating not just regulatory expectations, but also the Equality Act 2010, which mandates reasonable adjustments for individuals with protected characteristics, including mental health conditions and disabilities.

Monzo has publicly stated its commitment to supporting vulnerable customers, highlighting initiatives such as a dedicated Vulnerable Customers Team:

Our Vulnerable Customers team is here to make sure we consider everyone, and don't exclude anyone from using Monzo.

Monzo Blog Tweet

However, the experiences shared by us, our clients, and customers suggest a gap between policy and practice.

Failure to Prove Access to the Financial Ombudsman

Another issue of concern is Monzo’s alleged failure to adequately inform complainants of their right to escalate unresolved issues to the FOS. This is a breach of DISP 1.6.2R(6) and DISP 1.6.2R(7), which require firms to notify complainants of:

  • Their right to refer the complaint to the Ombudsman.
  • The relevant contact details and timeframe (typically within 6 months of a final response or after 8 weeks of inaction).

By neglecting to issue final response letters—or by sending them far outside the required timeframe—Monzo may be impeding consumers’ ability to seek redress through independent channels, thereby deepening the disadvantage for already vulnerable users.

Reputational and Regulatory Consequences

Monzo’s handling of these matters risks attracting enforcement action or reputational damage. The FCA previously intervened in cases where firms failed to meet complaint-handling obligations. In 2021, the FCA placed Monzo under investigation for possible breaches of anti-money laundering rules—indicating a pattern of regulatory concern.

Should Monzo’s failings in complaint handling and treatment of vulnerable customers be substantiated by the FCA or FOS, it may force:

  • Enforcement fines
  • Mandatory redress schemes
  • Public censures
  • Loss of consumer confidence

In a hyper-competitive fintech market, reputational harm can swiftly erode customer trust and limit long-term growth.

Conclusion: A Call for Accountability

Monzo Bank Limited must urgently address its shortcomings in complaint handling and the treatment of vulnerable customers. While the bank has successfully positioned itself as a model, customer-focused alternative to legacy (not any better) institutions, regulatory compliance and ethical conduct cannot be sacrificed in the pursuit of innovation and growth.

The failure to adhere to the FCA’s Principles for Businesses, coupled with delays of over 52 weeks in resolving complaints, paints a concerning picture. Furthermore, the inability to provide fair treatment to vulnerable customers not only violates specific regulations but also undermines Monzo’s broader commitment to responsible banking.

The FCA, Financial Ombudsman Service, and consumers must hold Monzo accountable for these failings. As the digital banking landscape continues to evolve, it is crucial that firms like Monzo not only prioritise customer experience and technological advancements but also meet their regulatory obligations—especially when it comes to ensuring fairness and transparency in handling complaints and vulnerable customers.

As regulatory investigations and individual complaints continue to mount, Monzo must take immediate action to address these failures, restore trust, and reinforce its commitment to upholding the highest standards of customer care and regulatory compliance.

Sources and More

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