Investment Scams - How To Stay Safe
Over £1bn is lost to investment fraud each year and the average loss per person is £20,000.
Criminals pressure people into buying investments that promise high returns, but in reality are either worthless or non-existent. The most common type of investment scam is share fraud, they may also offer investments in things such as gold, land abroad, carbon credits, diamonds, shares in hotels, fine wine etc.
If you deal with a scammer they will not be authorised by the Financial Conduct Authority (FCA) and you may not have the right to complain or claim
Scam can sophisticated and difficult to spot. Fraudsters can be articulate and appear financially knowledgeable. They may have credible websites, testimonials and materials that can be hard to distinguish from the real thing. So it’s important you know how to spot the warning signs.
HOW TO RECOGNISE A SCAM
The first time you’ll hear from them may be unexpected and about an investment opportunity not to be missed. This may be in a written letter, email or cold call, to offer a free research report into a company in which you hold shares, or a free gift or discount on their dealing charges.
The person contacting will be a welltrained, highly professional sounding salesperson. They will apply pressure on you to invest in a time-limited offer, offer you a bonus or discount if you invest before a set date, or say that the opportunity is only available for a short period of time.
They will often claim to be from legitimate firms, or firms which sound legitimate and have professional looking websites.
Fraudsters will downplay the risks to your money, or use legal jargon to suggest the investment is very safe.
Fraudsters will promise very tempting returns offering much better interest rates than those offered elsewhere. If it sounds to good to be true - it probably is!
Fraudsters can be very persistent, never taking ‘no’ for an answer. They often use a script to answer your concerns and questions. They will call victims repeatedly and stay on the phone a long time until they finally make a sale, or until you hang up on them.
You may be told that you have already entered into a contract to buy the shares and are under an obligation to pay. This is not the case as such contracts are not enforceable under UK law.
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HOW TO PROTECT YOURSELF
Check the FCA Warning List
The Financial Conduct Authority’s (FCA). Warning List is a list of firms and individuals that the FCA knows are operating without its authorisation. The tool also provides information about the risks associated with a particular investment opportunity.
Reject cold calls
People offering high risk investments or scams will often cold call. Legitimate firms are very unlikely to contact you in this way. If you’re called about an investment opportunity the safest thing to do is to hang up.
Remember, if an investment sounds too good to be true it probably is!
For more information on investment fraud visit the FCA’s ScamSmart website: ww.fca.org.uk/scamsmart
Always ensure the firm is on the FCA Register
Check that teh firm is allowed to give financial advice by visiting: https://register.fca.org.uk/ Get the name of the person and organisation contacting you. Use the details on the FCA Register to contact the firm, rather than a direct line they might give you.
Beware of impersonation fraud
Find out more on the National Crime
Agency website: https://nationalcrimeagency.gov.uk/
Get impartial advice
Seek impartial advice from a financial adviser unconnected to the firm that has contacted you before you make an
investment. You can find an adviser on unbiased.co.uk, and VouchedFor.co.uk
PIMFA have a list a FCA authorised financial advisers, stockbrokers and wealth managers, on their directory at: pimfa.co.uk/managing-your-money/finda-firm/
Top 100 firms searched on ScamSmart Warning List
Click the below button to see the top 100 firm name searches made by consumers using the ScamSmart warning list in May 2021. These include firm names that are and are not on our unauthorised business list as well as 'clone firms' pretending to be genuine firms. Visit fca.org.uk/scamsmart to check if we have a warning about a particular firm name and check authorised firms on the FCA Financial Services Register fca.org.uk/register.