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Investors have been warned by the Financial Conduct Authority (FCA) to be vigilant when taking out investment products and selecting investment providers. The advice comes in line with research conducted by the FCA with YouGov, that finds that 41% of people surveyed who are over 55 years of age have moved money out of savings and into investments - largely driven by low interest rates as they seek a more favourable rate of return. Of these:

  • 26% have invested in unregulated products
  • Of these, 3% invest once a month, with land, wine and art being popular investment choices
  • 23% are considering investing in unfamiliar investment types in the future
  • Of those who had fallen victim of investment fraud, 27% did so having bought an unregulated product through an unauthorised provider

With investors adopting increasingly riskier investment behaviour in a bid to get a better rate of return, the findings suggest that fraudsters are capitalising on this trend. The FCA released the findings as part of its ScamSmart campaign, which raises awareness of and helps to protect investors from investment fraud. The study follows previous FCA findings which demonstrated that people aged over 65 with savings of over £10,000 were three and a half times more likely to fall victim to investment fraud. This was particularly prevalent in London, the Home Counties and the South East.

What to look out for: investment fraud

Investment fraud can be very difficult to look out for, as fraudsters can appear to have an extensive understanding of finance and articulate this well – with many being armed with credible websites and marketing materials.

If a scammer does manage to get through, the FCA warns that any of the following are typical signs of this type of fraud:

  • Make contact unexpectedly about an investment opportunity through a cold call, email, or a follow-up call to discuss a promotional brochure they may have sent
  • Apply pressure on the potential victim, or perhaps offer a bonus or discount incentive, should they invest in a time-limited offer
  • Downplay the potential risks to the investor’s money, such as saying they will own the actual assets if the investment doesn’t work as expected, or using legal jargon to suggest the investment is very safe
  • Promise tempting returns that sound too good to be true, for example, offer much better interest rates than those offered elsewhere
  • Call the target repeatedly and stay on the phone a long time
  • Claim that the offer is only being made available to the targeted individual - or even ask that the offer is kept secret.

Spotting good advice

In addition to the tell-tale signs that the FCA has highlighted, it is prudent to be aware of what sound advice looks like. There are many factors that should be taken into consideration when selecting investments. Regardless of whether investors seek full advice or prefer to select their own holdings, risk is a key driver that determines the suitability of investment vehicles and underlying assets. Sound investment advice will consider an investor’s financial circumstances, drawing on their appetite for risk and wider objectives to determine the right solutions for achieving these. Should someone unfamiliar with your situation try to sell you an investment without trying to understand these factors, you should question the suitability of this for your short- or long-term objectives.


What you can do

  • Reject unsolicited calls
  • Get impartial investment advice to discuss the suitability of these investments, from a party that is not connected to the provider that contacted you
  • If you suspect you have spoken to a fraudster, or recognise any of the above claims, check the FCA Warning List which details companies – or fraudulent ‘organisations’ that the FCA advices investors against

By investing in unregulated products through an unauthorised provider, you will be exempt from  protection from the Financial Ombudsman Service or Financial Services Compensation Scheme, if things go wrong. The FCA research highlighted that despite this, nearly half (48%) of those investing in unregulated products through unauthorised firms do so without getting professional advice or checking publicly available investor information, such as the FCA’s Warning List.

Learn more about the FCA’s ScamSmart campaign

Learn more about Coutts wealth management advice approach

Protecting your identity - top tips

  • Install anti-virus/firewall software on your devices and regularly update it.
  • Never reveal your card or online banking PIN. Ever. To anyone.
  • Choose strong passwords and do not use the same PIN and password for everything.
  • Keep your bank updated with new contact details.
  • Check your statements and immediately report anything you do not recognise.
  • Securely store financial and other valuable documents such as your passport.
  • Ensure you dispose of documents diligently (for example, use a cross cut shredder to destroy statements when no longer required).
  • Where you suspect suspicious activity on your email account, change your password immediately and contact your provider to protect the account from further unauthorised usage.

For more information on how to protect yourself, visit our Security Centre

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