City watchdog launches campaign to warn consumers over investment fraud

15th October 2014


The City watchdog, the Financial Conduct Authority (FCA), has launched a National campaign aimed at educating those most at risk from investment fraud.

The regulator will use funds recovered from the proceeds of crime to finance the initiative which will warn people about financial con-men and how to spot a potential scam.

Those most at risk of investment fraud are people in retirement who are actively seeking an investment opportunity.

One consumer told the FCA that he was called out of the blue by a firm that offered to buy the shares that he held in a company. The deal sounded legitimate and the website looked professional. It wasn’t until he was asked to pay a £5,000 bond to enable the deal to go through that alarm bells rang.

According to the FCA the average victim loses around £20,000, and every year it receives around 5,000 calls from investors about suspected investment fraud.

Typically investment scams involve high-pressured selling, using boiler room tactics, such as trading stocks in firms that do not actually exist.

Martin Wheatley, chief executive of the FCA says: “Those operating investment scams use very sophisticated techniques to build trust and can dupe even experienced investors out of their savings. With large numbers of people at risk, it’s important to know how to spot the signs of a potential scam. We would caution against anyone taking a risk on a firm or individual who isn’t authorised by the FCA. Our message is simple, don’t accept a cold call.”

Investment scams are difficult to spot and are designed to look like genuine investments. The FCA has seen examples of fraudulent websites that mimic those of legitimate firms and investment brochures that would be likely to convince even an experienced investor that the product was genuine.

The FCA is encouraging anyone who is considering an investment to check its ‘Scamsmart’ website,, and seek independent financial advice from a regulated professional before going ahead.

Key signs that the investment may be a scam:

In the last year, the FCA processed 6,593 reports of suspected unauthorised activity, issued 295 consumer warnings and secured the removal of 61 websites promoting suspected boiler rooms. The FCA has also secured criminal convictions against four individuals who were involved in unauthorised activity, including running fraudulent investment schemes. It has also taken eight civil injunctions this year.

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