It can be a dangerous world out there for your personal finances.
Scammers and fraudsters are sadly widespread, with stories of new scams coming to light every week and always looking for their next unsuspecting victim.
New figures highlighted by the Financial Conduct Authority (FCA) show nearly £200 million was lost to reported investment scams last year alone
With the average victim loosing £29,000 in 2018, common scams have involved investments in shares and bonds, foreign currency exchange trading (forex) and cryptocurrencies.*
“The amount lost last year to investment fraud is staggering, over £197 million according to Action Fraud.
“If my 30 years of experience in investment markets has taught me anything, it’s this – regardless of how confident you are about what you’re investing in, you should also be just as confident you know who you’re investing with. The FCA Warning List is a fantastic resource for smart investors to use to protect themselves from scams.”Alvin Hall, a personal finance expert who is supporting the FCA’s campaign to protect investors from scammers
They also pointed out that scammers are resorting to increasingly sophisticated tactics in order to persuade their victims to give up their cash.
According to the FCA and data from their call centre, it’s investments from unregulated firms that are most commonly reported as scams. These include investments in shares and bonds, forex and cryptocurrencies – all from firms that do not hold FCA regulation or authorisation.
These investment scams represent 85% of all suspected investment scams reported last year.
With the first quarter of the year considered to be a peak season for investing, with end of the tax year approaching, investors are being warned to be particularly vigilant.
The FCA warned that the profile of investment scams is changing, with more of these taking place online. It means scammers are increasingly moving away from traditional cold calling on the telephone to find victims, although this approach does continue to exist.
Fraudsters are now contacting people through emails, professional looking websites, and social media channels, including Facebook and Instagram.
Research carried out by the FCA found that, last year, more than half of potential fraud victims did the right thing by checking first with the FCA Warnings List at www.fca.org.uk/scamsmart/warning-list.
This is a tool that helps users to find out more about the risks associated with an investment, and search a list of firms the FCA knows are operating without its authorisation.
The FCA is urging investors to consider the following six warning signs when making investment decisions:
“The first quarter of the year is a common time for people to make their financial plans for the year, including investments. But before you invest do your homework. Always check the FCA’s register to make sure you’re dealing with an authorised firm and use the contact details on our register, not the details the firm gives you, to avoid ‘clones’. Also check the FCA Warning List of firms to avoid. Remember, if in any doubt – don’t invest!
“Investment scams are becoming more and more sophisticated and fraudsters are using fake credentials to make themselves look legitimate. The FCA is working harder than ever to help protect the public against this threat. Last year we published over 360 warnings about potentially fraudulent firms. And we want to spread the message so we can all better protect ourselves from investment scams.”Mark Steward, Executive Director of Enforcement and Market Oversight, FCA.
“These statistics show that investment fraud is a major threat, with fraudsters doing everything they can to manipulate potential victims into making investments. Victims are often coerced or persuaded into parting with significant amounts of money and this can have a devastating impact on their wellbeing and finances.
“We are working with the FCA to raise awareness of investment fraud and would urge anyone who is considering in investing to check with the FCA before parting with their money.
“If you think you have been a victim of investment fraud, report it to Action Fraud.”Director of Action Fraud, Pauline Smith
The FCA is advising investors to reduce their chances of falling victim to investment fraud by carrying out three simple steps.
You should always reject unsolicited investment offers, whether these are made online, via social media, or over the telephone.
The recent introduction of new legislation makes it illegal for anyone to cold call you about pensions. This should serve as a strong warning that any investment-related cold calling is likely to be an attempted scam, as legitimate firms do not cold call prospective customers.
Before investing any money, always check the FCA Register to make sure that the individual or firm involved is authorised. You should also check the FCA Warning List to make sure the firm you are dealing with is not listed there.
And finally, you should seek impartial personal advice before investing any funds. There is never any harm in seeking a second opinion before investing your money.
There are more tips at the FCA’s ScamSmart website, which can be found at www.fca.org.uk/scamsmart.
If you’ve lost money in a scam, contact Action Fraud on 0300 123 2040 or visit their website at www.actionfraud.police.uk.
*Data from Action Fraud, which revealed more than £197 million of reported investment scam losses last year.
Jon Doyle is Founder and Financial Planner at Juniper Wealth Management. Advising clients since 2008 he has guided clients through good time, bad times and the ugly. With a clear vision on how advice should be delivered and strong opinions on how we should be investing money in order to live the life we want to live free from money worry.