Articles

How to spot the signs of investment fraud

5 minutes

How to stay scam smart and avoid being targeted by fraudsters.

  • Pension freedoms give you more opportunity to invest, but do so with caution 
  • Take your time when checking investment offers before committing 
  • Always seek impartial advice 

Between June and November 2016, the Financial Conduct Authority (FCA) received 2,142 reports of scams or unauthorised firms. As investment opportunities and scams can be difficult to tell apart, the FCA is urging people to take their time when checking investment offers before going ahead.

Recent research by the FCA revealed a fifth of over 55s with above average incomes suspect they were targeted by a fraudulent investment scam in the past three years. This increased to a third of those aged 75 and over.

On average, victims of investment fraud lost £32,000 [1] each in 2016. Despite the number of people potentially contacted by scammers, one in eight of over 55s who invested in financial products spent little or no time researching them before handing over money.

It's important to be aware of investment fraudsters and their tactics. In many cases, they have professional looking websites to entice victims and make them feel their service is genuine.

Interestingly, only 27 per cent of people sought professional, impartial advice to help with their investment choices - something the FCA encourages consumers to do before investing.

How to avoid being a victim of investment fraud

In response to the recent research into investment scams, the FCA is urging people to be mindful of fraudsters. Here are some of the things you can do to keep your money safe:

  • Reject unsolicited investment offers
  • Check the FCA Register to see if the firm or individual they are dealing with is authorised, and check the FCA warning list of firms to avoid
  • Get impartial advice
Mark Steward, Director of Enforcement at the FCA, said:

'Making a significant financial investment is an important decision - be prudent, do your homework and be especially on guard if contacted out of the blue by someone you don’t know.'

Making a significant financial investment is an important decision - be prudent, do your homework and be especially on guard if contracted out of the blue by someone you don’t know.

Mark StewardDirector of Enforcement at the FCA

Look out for investment scams - you’ve worked hard for your pension savings. Following these simples steps can help keep your money safe. For more on scams, check out our pensions explained article.

For more information on Investment scams and top tips from the FCA, take a look at their website.

Sources

  • [1] Figures from Action Fraud released in October 2016
  • All figures, unless otherwise stated, are from YouGov Plc. The total sample size was 1,004 GB adults aged 55+, in social grade ABC1, with a gross household income of £30,000+ and/ or savings of £5,000+. Fieldwork was undertaken between 3rd - 11th November 2016. The survey was carried out online.
  • www.fca.org.uk/scamsmart