The Financial Conduct Authority (FCA) has warned people to be extra vigilant to the threat of investment scammers after victims lost over £197 million in 2018 – £29,000 each on average.
It says scammers are becoming ever more sophisticated, targeting victims with professional looking websites and messages through social media channels, like Facebook and Instagram. The most commonly reported thefts involved investments in shares and bonds, foreign exchange and cryptocurrencies.
Scammers are also using branding from legitimate, regulated companies and even cloned websites to solicit people to make investments. James Hambro & Partners is one of a number of leading firms whose branding has been appropriated by scammers, though we never make cold approaches encouraging people to invest.
Mark Steward, Executive Director of Enforcement and Market Oversight, FCA, said: “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.”
JH&P partner Penny Kunzig warned investors to check the FCA Warning List, which takes investors on a step by step process to assess the legitimacy of an investment approach. The FCA also issues warnings on fraudulent companies as scams are reported and has a register of legitimate companies.
She said: “We are now in the peak investment season – sometimes known as the ISA season – when many people are under pressure to invest before the tax year end. This is a time to be particularly vigilant. The scale of scamming is horrendous, and we know that the figures are probably only the tip of the iceberg because many victims are too embarrassed to report thefts.”
Scam warning signs
The FCA is working with financial expert and experienced investor Alvin Hall to educate the public on the most common tactics used by investment scammers. Its latest campaign encourages people to look out for these six warning signs.
- Unexpected contact – Traditionally scammers cold-call but contact can also come from online sources e.g. email or social media, post, word of mouth or even in person at a seminar or exhibition.
- Time pressure – They might offer you a bonus or discount if you invest before a set date or say the opportunity is only available for a short period.
- Social proof – They may share fake reviews and claim other clients have invested or want in on the deal.
- Unrealistic returns – Fraudsters often promise tempting returns that sound too good to be true, such as much better interest rates than elsewhere.
- False authority – Using convincing literature and websites, claiming to be regulated, speaking with authority on investment products.
- Flattery – Building a friendship with you to lull you into a false sense of security.
Alvin Hall said: “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.”
To prove how sophisticated investors have become, Hall himself was put to the test, filmed receiving three investment pitches. Watch the video to see how he got on.
If in doubt – don’t invest
The FCA’s Mark Steward said:“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!’
The FCA’s ScamSmart campaign encourages those considering investing to check its dedicated website (www.fca.org.uk/scamsmart) for tips on how to avoid investment fraud. If you’ve lost money in a scam, contact Action Fraud on 0300 123 2040 or www.actionfraud.police.uk.
If you are approached by anyone claiming to represent James Hambro & Partners and suspect they may be scammers, please call us – 020 3817 3500.