The Telegraph has forced banks to repay £1.4m to vulnerable fraud victims, prompting the City watchdog to warn of “consequences” if they continue to neglect their customers.

This newspaper’s consumer champion, Katie Morley, found banks had left helpless customers who had serious health problems exposed to the fraud epidemic – and then unfairly dismissed their pleas for their money back.

Experts said the cases exposed “inhumane” treatment of customers by banks, which was just the “tip of the iceberg”, and that banks were routinely failing their most vulnerable customers preyed on by scammers.

The Financial Conduct Authority has now said it is examining whether vulnerable fraud victims are being wrongly denied refunds and it warned of “consequences” for banks that failed to treat them fairly.

This could mean banks are fined or forced to reimburse mistreated customers. Mark Steward, executive director of enforcement and market oversight at the FCA, told The Telegraph: “Where the [customer’s] vulnerability is of a kind that affects the person’s ability to make a decision in their own interests they should be reimbursed. If the banks are getting it wrong more often than they are getting it right, there will be consequences with the FCA.”

Three in four fraud victims are wrongly denied refunds, according to the Financial Ombudsman Service, suggesting that banks are routinely ignoring their own code of conduct.

Industry figures show that fewer than one in two fraud victims receive compensation from their bank. Just £271m of the £583m lost last year to scams was returned.

In one case resolved by Katie Morley, a reader who had been on mind-altering medication for Parkinson’s disease was refused a single penny of compensation by Barclays after she lost £829,000 to a bogus investment firm. In another case a woman whose severe depression led to a spell in a mental hospital lost £290,000 to scammers pretending to be HSBC’s fraud team.

She was told by the bank that no fraud had occurred on her account. Another elderly reader who suffered from multiple health conditions was left living in squalor and unable to afford a bus fare after his banks stood by while he lost £1m to aggressive fraudsters.

Consumer finance campaigner Mark Taber described the treatment of the victims by their banks as “inhumane”.

He said: “As these cases demonstrate, scammers target vulnerable people with savings and they keep going until they have everything. Banks have a duty to stop this happening, but they are failing to do it.

“Leaving people struggling in severe cases like this is worse than cruel, it is inhumane. This is just the tip of the iceberg. The FCA needs to get really tough and should impose serious fines on banks that fail vulnerable fraud victims. This money should go into a pot to help affected customers.”

Adults with vulnerable characteristics, of whom there are almost 28 million in Britain, including those experiencing poor health, challenging life events or low financial resilience, are more susceptible to scammers.

Banks and building societies have a regulatory obligation to safeguard these customers. Three in five people who fall victim to a scam suffer from a mental health problem, according to the Money & Mental Health Policy Institute.

Impaired decision making, low motivation and increased impulsivity mean vulnerable adults are three times more likely to fall victim to an online scam than the rest of the population.

Mel Stride, chairman of the Commons Treasury Committee, said it was the banks’ responsibility to “protect their customers’ savings”.

He said: “The Government and the banking sector must be on the front foot in protecting people from financial loss through scams, particularly at a time of such economic uncertainty.”

Most scam victims will never see their money again, even though many of the big lenders have signed a voluntary code intended to improve reimbursement rates for customers who lose money to “no blame” “authorised push payment” scams.

Conor D’Arcy, of the Money & Mental Health Policy Institute, said: “Banks could definitely be doing more to protect vulnerable people from scammers. We’d like to see banks involving more people suffering from mental health problems in their design and testing of scam prevention and reimbursement policies.”

A spokesman for UK Finance, the banking trade body, said banks “worked hard” to identify and protect vulnerable customers from scams and fraud but admitted that “more needed to be done” to improve reimbursement of losses.

A Barclays spokesman said: “As a result of a further review of this case, we recognise that this was a tragic case of a sophisticated investment scam. Due to the circumstances of this matter, we will be returning the funds lost in full to our customer.

“We urge customers to check whether an investment company is a genuine FCA-regulated financial firm before transferring any money and, if in doubt, to seek independent financial advice first. If the investment opportunity seems too good to be true, it undoubtedly is.”

An HSBC spokesman said: “We are committed to protecting customers from scams, as well as educating them on how they can protect themselves, and are sorry to hear that Ms C was the victim of an ‘authorised push payment’ scam.

“On this occasion we did not provide the required warnings to Ms C about the scam and missed opportunities to intervene and for that we are truly sorry. We have reimbursed all funds that were lost from her First Direct account.”

The bank added: "Scammers are devious criminals who use a range of techniques to exploit their victims to convince them they are genuine.

"They find it easier to manipulate people into sending them money than breaking into the technology that has been put in place to prevent fraud, and they have no qualms about targeting vulnerable people."