The Financial Conduct Authority (FCA) has launched a national campaign to raise awareness of how to spot investment scams.
The regulator is using money recovered from similar crimes to fund its new Scamsmart tool, which has advice on how to avoid being duped by an investment scam, as well as a ‘warning list’ of firms to avoid.
Dealing with investment scams
The FCA receives around 5,000 calls a year from investors about suspected investment fraud. And the sums involved are considerable – the regulator reports that the average victim loses around £20,000.
Last year the FCA issued 295 warnings about specific scams and removed 61 websites promoting suspected boiler rooms. Four individuals were also convicted for unauthorised activities.
We also regularly write about the latest scams that come to the attention of our expert Tony Levene.
How the scams work
Investment scams generally involve high-pressured selling of products which generally do not exist. These include landbanking, carbon credits and rare earth metals. They typically originate from a cold call or email, so alarm bells should ring any time you receive an unsolicited call about an investment.
The most at risk are those in retirement looking for somewhere to invest their money.
Is it a scam?
The FCA has picked out a number of key signs that should make you wary about whether an investment opportunity is a scam:
- You are contacted through a cold call or email, or a follow up call after receiving a promotional brochure unexpectedly.
- You are pressured to invest in a ‘time-limited’ offer. You may be told that you will receive a bonus or extra discount if you invest today.
- You are told this offer is only available to a limited number of people.
- Any risks around the investment are downplayed, with the use of legal jargon to assure you that your money is safe.
- The returns sound too good to be true.
- You are called repeatedly and kept on the phone for a long time.