Investment scams warning from Financial Conduct Authority

People are being warned to watch out for investment scams as the City regulator has seen an increase in inquiries about such incidents.

Between April and September last year, the Financial Conduct Authority (FCA) received 16,400 inquiries about possible scams, up nearly a third from the same period in 2020.

Cryptoasset scams were among the top scams reported, with some scammers also impersonating the FCA.

Boiler room scams were also common. These involve frauds being run out of offices known as boiler rooms and criminals contact people out of the blue and convince them to invest in schemes or products that are worthless or do not exist.

The FCA also said it is taking assertive action in the consumer investment market and has stopped around one in four firms wanting to join from entering it.

The regulator’s ScamSmart campaign encourages those considering investing to check its dedicated website. The site features an online tool, and a “warning list”.

The FCA’s InvestSmart campaign launched in October 2021, targeting consumers who are new to investing, and aims to provide them with information to make better-informed investment decisions.

Sarah Pritchard, executive director of markets at the FCA said: “Consumers need to have confidence when making investment decisions and the data we’ve published today shows how prevalent scams can be.

“Before investing, check you know who you are really dealing with, check if they are authorised by the FCA and do your research to understand the risks that might be posed. Find out how to avoid scams on the ScamSmart website and get tips on investing safely on the InvestSmart website.”

Laith Khalaf, head of investment analysis at AJ Bell, said: “Last year was boom time for cryptocurrencies, and for suspicious crypto marketing campaigns as well. There was a big spike in consumers checking the FCA’s warning tool after being approached with a cryptocurrency investment opportunity which no doubt sounded too good to be true.

“There was a similarly large rise in consumers checking on companies offering pension transfer services, which suggests that the pension scam market is alive, well, and thriving.”

Myron Jobson, senior personal finance analyst at Interactive Investor, said: “The internet is a rich trolling ground for unscrupulous individuals to convince unsuspecting victims to part with their hard-earned money. Fraudsters are only too willing to exploit any ignorance or naivety.”

He continued: “Unfortunately, with so many fraudsters hiding in the shadows and escaping detection, the onus is on individuals to avoid falling prey to financial fraud – there is no getting away from it. We all need to be on our guard.

“The Interactive Investor Great British retirement survey last year found that only 34% of those who fell victim to a scam had received their money back. 56% had not had their money returned, and 11% were still waiting.”