I received a call from a friend of my parents recently querying a bond he had seen on the internet. He wanted to invest £50,000 and it appeared to offer a very good income and guarantee of capital.
On closer inspection, it looked too good to be true and then I discovered it listed on the Financial Conduct Authority’s (FCA) website as a scam. My contact used to work in financial services and believed he had an above average understanding of the sector, yet he was still caught out, which is a valuable lesson to all of us.
I am very glad this chap contacted me – we saved him £50,000 and a great deal of heartache – but scams are becoming increasingly sophisticated and hard to spot.
Fraudsters can be articulate and financially knowledgeable and will hide behind credible websites, testimonials and marketing materials that are difficult to distinguish from the real thing.
So how do you ensure you’re not parted from your life savings by a scammer?
Spot the warning signs
Traditionally, scammers would cold call potential victims, but these days you might receive unexpected contact in the form of emails or social media posts. They might even have the audacity to appear in person at a seminar or exhibition, so be on your guard.
Be wary of time pressures. They may offer you a bonus or discount if you invest before a certain date or say the opportunity is only available for a short period. They may also post fake reviews, claim other clients want in on the deal, or attempt to build a friendship, to lull you into a false sense of security.
If it sounds too good to be true, it probably is. Fraudsters often promise tempting returns, such as much better interest than elsewhere, however, this is not foolproof. They may make their returns seem realistic in order to appear more legitimate.
False authority is another red flag. Take care not to fall for convincing corporate literature or websites that claim the firm is regulated. A scarily common scam is to clone a genuine firm. The only way to tell these apart is to cross reference the organisation’s details with Companies House or directory enquiries, to ensure they match up.
FCA registration
Almost all financial services firms must be registered with the FCA and if they’re not, it is probably a scam. Always check the register before investing and don’t be tempted to click through from links on emails or the website of the firm offering you the investment. Make sure you access the FCA’s website directly: https://register.fca.org.uk/s/
The regulator has a warning list, against which you can check the risks of a potential investment and see if a firm is known to be operating without authorisation. Don’t rely solely on this, however, as scammers change their names and details all the time.
If you’ve handed over your bank details to a firm you think may be running a scam, let your bank know ASAP. Likewise, if you’ve agreed to transfer your pension, contact the provider straightaway – they might be able to stop the transaction.
Stay on your guard
Sadly, if you’ve already unwittingly invested in a scam, fraudsters are likely to target you again or sell your details to other criminals.
The follow-up scam might be completely different or related to the previous one, for example, they may offer to return your money or buy back the investment after you pay a fee.
The best way to protect yourself is to seek independent financial advice before investing. We are super vigilant and will always look after your best interests.
The Money Advice Service is a good place to start if you are looking for information on investing. If you have any concerns about a potential scam, contact the FCA immediately on 0800 111 6768.
To find out more about investing safely, contact me on (01246) 298181 or email: enquiries@belmayne-ifa.com
