Industry confidence in UK fraud regulation collapses as criminals weaponise AI faster than defences deploy

• AI-driven threats exploded from minor concern to primary fear, with 64% dreading identity deepfakes

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Confidence in the UK's ability to regulate fraud has collapsed to a historic low as the payments industry grapples with an explosion in AI-powered attacks, according to a comprehensive three-year analysis revealing the steepest decline in regulatory trust on record. 
 
The Financial Crime 360 2025 State of the Industry report published by The Payments Association reveals a significant decline in confidence in UK fraud regulation, with a 32 percentage point drop in just three years - from 86% viewing it as "fit for purpose" in 2023 to barely half (54%) in 2025. The collapse coincides with artificial intelligence (AI) transforming from a minor concern affecting just 8% of respondents to the dominant threat, with 64% now fearing identity deepfakes above all other risks. 
 
Analysis by The Payments Association comparing financial crime professionals' responses from 2023 and 2025 reveals an industry in crisis. Respondents rated their collective performance in combating financial crime in 2025 at just 49 out of 100, below the halfway mark, while nearly half (46%) demand immediate regulatory updates. 
 
"We're witnessing a fundamental shift that makes our traditional defences obsolete," said Ben Agnew, chief executive officer of The Payments Association. "The data shows criminals have weaponised AI faster than we've deployed defences, with only 22% of firms reporting advanced AI readiness despite over half investing in these technologies. The industry must act now: accelerate AI defence capabilities, break down silos to promote intelligence sharing, and demand regulatory frameworks that can evolve as fast as the threats. The 2025-2026 window is critical." 
 
The analysis also exposes a troubling paradox for 2025 and beyond: while 50% of organisations plan to increase fraud prevention spending and 53% prioritise machine learning (ML) investment, actual AI/ML readiness remains critically low, with 55% of organisations reporting basic or no preparation and only 22% achieving advanced or full readiness – the poorest performance among all major technologies.  

This implementation gap leaves the industry vulnerable, as authorised push payment fraud continues to inflict the heaviest damage, accounting for 22% of business impact. Perhaps most tellingly, industry optimism about designing out economic crime has shifted from highly optimistic (78%) in 2023 to cautiously positive (43%) in 2025. 

For more information, visit: https://thepaymentsassociation.org/  

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