In 2015/16, there were 3,186 reports of investment fraud. However the true figure is likely to be far higher as the majority of fraud is unreported. In the same year, victims lost an average of £32,000 to these scams.
To help combat the problem, Quilter Cheviot is supporting the FCA campaign called ScamSmart. Typically, experienced investors and those over 65 with savings in excess of £10,000 are targets for investment fraud, and it is important that we remain aware of the facts and best practice when managing your money.
What is investment fraud?
Investment fraud occurs when fraudsters’ pressure people into buying investments that promise high returns, but in reality are either worthless or non-existent. The most common type of investment scam is share fraud, but fraudsters may also offer investments in bonds, currency, commodities such as gold or diamonds, property developments overseas or even fine wine.
Investment fraud is often sophisticated and very difficult to spot. Fraudsters can be articulate and appear financially knowledgeable. They may have credible websites, testimonials and materials that can be hard to distinguish from the real thing. So it’s important you know how to spot the warning signs.
Spot the warning signs
Investment fraudsters will use a variety of techniques to try to take your hard earned money, and regularly target experienced investors.
They may do one or more of the following:
How to avoid investment and pension scams
1.Reject unsolicited investment offers
If you’re contacted out of the blue about an investment opportunity, chances are it’s a high risk investment or a scam. Scammers usually cold-call but contact can also come by email, post, word of mouth or at a seminar or exhibition. If you get cold-called, the safest thing to do is to hang up. If you get unexpected offers by email or text, it’s best to simply ignore them.
2. Check the FCA Register and Warning List
The Financial Conduct Authority’s (FCA) Warning List is a list of firms and individuals that the FCA knows are operating without its authorisation. The tool also provides information about the risks associated with a particular investment opportunity.
If you deal with an unauthorised firm then you will have no protection from the Financial Ombudsman Service or Financial Services Compensation Scheme if something goes wrong
3.Get impartial advice
Always get independent advice before investing – don’t use an adviser from the firm that contacted you.You can find financial advisers at unbiased.co.uk and VouchedFor. If you’re looking for a stockbroker or wealth manager, you can try The Personal Investment Management & Financial Advice Association (PIMFA).
Remember, if an investment sounds too good to be true it probably is! For more information on investment fraud visit the FCA’s ScamSmart website.