Top tips to help you avoid becoming a victim of fraud

This is the first in my series of posts to help prospective investors avoid becoming victims of investment scams. 2020 was the year fraudsters increased their attacks on individuals' private wealth and they won't stop in 2021.

According to the Investment Association, the trade body that represents the UK’s investment management sector, the total number of reported incidents has quadrupled since July – when it last warned investors of the risks. In the three months to 12 October 1175 incidences of these sophisticated “cloning scams” were reported, compared with 300 in the three months to July. A total of £9.4m of investor money was lost to this surge in activity, more than double the £4m lost from March to July of 2020.

Below are my first 3 tips.

1 - Check the company (and the investments offered) are regulated

Regulation will determine what cover you have if things go wrong. In the UK, financial advisers should be regulated and approved by the Financial Conduct Authority (FCA), and you can check the register to ensure they are. Always use the contact details on the FCA Register, not details given to you over the phone or via email. You can check the firm’s details with directory enquiries or Companies House to make sure they’re the same. If you use an adviser who is not approved, you will not have access to the Financial Ombudsman Service or the Financial Services Compensation Scheme should things go wrong.

2 - Check the Financial Conduct Authority (FCA) warning list

Use the FCA Warning List to check the risks of a potential investment – you can also search to see if the firm is known to be operating without authorisation. Even if a firm isn’t on the FCA’s list, it may still be a scam – firms change names and details all the time. The FCA has a list of unauthorised firms which people can refer to as well as their ScamSmart pages.

3 - Get impartial advice

You should seriously consider seeking financial advice or guidance before investing. You should make sure that any firm you deal with is regulated. The Money Advice Service has information on investing and about how to find a financial adviser. Alternatively, you could get further information from a group that represents advisers such as PIMFA.

If you cannot wait until the next post, you can view a full list of these tips as they have been published in What Investment magazine.


Important information

The contents of this article are for information purposes only and do not constitute advice or a personal recommendation. Investors are advised to seek professional advice before entering into any investment decisions. Please also note the value of investments and the income you get from them may fall as well as rise and there is no certainty that you will get back the amount of your original investment. You should also be aware that past performance may not be a reliable guide to future. performance.

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