I had planned to update readers each week with details of investment scammers, thinking there might be four or five to draw your attention to. However, when I checked the Financial Conduct Authority’s (FCA) website for updates, there were so many that I thought it would make more sense to alert you to what the FCA is doing to protect consumers.
The FCA tracks details of investment scammers that have been reported to them by members of the public, enforcement agencies and other UK financial regulators. They update their records with this information and report it on a database.
I have attached relevant link to the FCA database below, so you can check for yourself.
Cloning scams
It would appear to that one of the most common tactics used by investment scammers is to try and pass themselves off as a genuine, authorised investment firm; this scam is known as cloning.
This is where fraudsters use the details of a legitimate firm which has been authorised by the FCA, to convince people that they work for a genuine, authorised firm. For example, they might use the real company’s Firm Registration Number (FRN), which is the number used to validate and confirm the existence of the company on the FCA Register. *
Every financial adviser authorised to conduct business in the UK is required to be registered with the FCA. The name of that firm (or individual), their FRN and contact information is recorded on the FCA Register which you can check here.
Obviously, someone passing themselves off as an authorised firm, will use the same name and FRN that appears on the Register. In that situation, the advice from the FCA is to always call the ‘firm’ back from the switchboard number given on the Register to verify their identity.
Also, you need to be alert to any subtle differences in information given out by the investment scammer. For example, telephone numbers switched around (transposition ‘errors’), or website domain names that read “.info” instead of the genuine “.com”.
Email addresses can also be changed in the same way: where the name of an actual approved adviser can be used but the email is directed to an “.info” address instead of a “.co.uk” address for example.
Unauthorised investment firms and financial advisers
The FCA is very clear that virtually every firm (or individual) engaged in offering, promoting or selling financial services or products in the UK has to be authorised, registered or approved by them. Or have received confirmation that they are exempt.
However, there are many firms that act without FCA approval and some of these are knowingly operating investment scams. To check whether a firm that has contacted you is on the FCA’s unauthorised database, please click here
The FCA also advises that you should not assume a firm is legitimate just because it does not appear in this database. These advisers or investment firms frequently change names and it may not have been reported to the FCA yet.
The FCA also maintain a Scamsmart warning list, so if you have any doubts about the investment opportunity being presented to you, please check this list.
FCA risk warning
If you do decide to use an unauthorised firm, then you will not have access to recourse under the Financial Services Compensation Scheme (FSCS), if your investment fails to perform as expected. In addition, you cannot rely on the Financial Ombudsman Service (FOS) to intervene and mediate on your behalf to resolve any complaint you have against the unauthorised firm.
Even without any of the above checks, consumers should be aware that a typical clone scammer or unauthorised firm will cold-call you to promote shares, property or other investment opportunities that turn out to be non-tradeable, worthless, overpriced or even non-existent. So red flags should be raised anyway when a call of that nature is received.
Report an investment scammer
If you believe you have been approached by a cloned or unauthorised firm, then please contact the FCA’s Consumer Helpline on 0800 111 6768. Alternatively, you can report a potential investment scammer online using the FCA’s reporting form.
*FCA Register
The Financial Services Register is a public record that shows details of firms, individuals and other bodies that are, or have been, regulated by the FCA or the Prudential Regulation Authority (PRA). It will also include details of those firms who are exempt.
In addition, you can also search the Register for individuals that work in an authorised firm and perform roles that have been approved by the FCA or PRA.
How investment scams work in practice
To learn more about how investment scams work in real life, please click here.
