The watchdog the Financial Conduct Authority (FCA) has launched a national campaign ‘Scamsmart’ to warn people about investment fraud and how to spot a potential scam. The FCA website is informing potential investors about how to recognise and avoid investment fraud.
An estimated £1.2 billion a year is lost to investment fraud in the UK. Victims lose on average £20,000 each. The FCA says that fraudsters use a number of tactics to get their victim to invest in products which don’t exist for example land-banking schemes, carbon credits and rare earth metals.
The FCA believes that those most at risk of investment fraud are people in retirement who are actively seeking to get a good return on their savings. One consumer told the FCA that he was called out of the blue by a firm that offered to buy the shares that he held in a company. The deal sounded legitimate and the website looked professional. It wasn’t until he was asked to pay a £5,000 bond to enable the deal to go through that he became suspicious.
Martin Wheatley, Chief Executive of the FCA said: “Those operating investment scams use very sophisticated techniques to build trust and can dupe even experienced investors out of their savings. With large numbers of people at risk, it’s important to know how to spot the signs of a potential scam. We would caution against anyone taking a risk on a firm or individual who isn’t authorised by the FCA. Our message is simple, don’t accept a cold call.”
City of London Police Commander Steve Head, who is the Police National Coordinator for Economic Crime said: “Tackling investment fraud has been for many years a major priority for the City of London Police, it’s a crime that hits older people hardest with victims losing money that they have worked to save their whole lives and often destroying their retirement plans. The City of London Police is fully supportive of the FCA campaign and backs their call for people to always hang up on cold callers. And if anyone does fall victim to an investment fraud, it is vital they report to Action Fraud to give law enforcement the best chance of tracking down those responsible and dismantling their criminal operations”.
Signs
You are contacted unexpectedly about an investment opportunity through a cold call, email, or a follow up call after receiving a promotional brochure out of the blue
You are pressured to invest in a time-limited offer, for example a bonus or discount is promised if you invest before a set date
The risks to your money are downplayed, for example you are told that you will own assets you can sell yourself if the investment doesn’t work as expected, legal jargon is used to suggest the investment is very safe
The returns sound too good to be true , for example, better interest rates than those offered elsewhere
You are called repeatedly and kept on the phone for a long time
You are told that the offer is only available for a limited time or to a limited group of people.
For further information visit the FCA’s Scamsmart – www.fca.org.uk/scamsmart.
The average investor loses around £20,000 and the FCA receives around 5,000 calls a year from investors about suspected investment fraud.
Investment scams are the watchdog admits difficult to spot and are designed to look like genuine investments. The FCA has seen examples of fraudulent websites that mimic those of legitimate firms and investment brochures that would be likely to convince even an experienced investor that the product was genuine. Those said to be most at risk of investment fraud are people in retirement who are actively seeking an investment opportunity. One consumer told the FCA that he was called out of the blue by a firm that offered to buy the shares that he held in a company. The deal sounded legitimate and the website looked professional. It wasn’t until he was asked to pay a £5,000 bond to enable the deal to go through that alarm bells rang.
In the last year, the FCA reports that it processed 6,593 reports of suspected unauthorised activity, issued 295 consumer warnings and secured the removal of 61 websites promoting suspected boiler rooms. The FCA has also secured criminal convictions against four people involved in unauthorised activity, including running fraudulent investment schemes. It has also taken eight civil injunctions this year.
