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Don’t fall prey to investment scams


From simple cons to elaborate schemes, attempts to prise away your client’s hard-earned money are nothing new. Yet there are arguably more windows of opportunity for scammers today than ever.


In 2018, a total of £354m was known to have been lost through bank transfer scams, mostly from personal accounts, according to UK Finance, a trade association for the sector. Most individual losses run into thousands of pounds.

But is there a way your client's can safeguard their savings from crafty criminals? The good news is that they can vastly reduce their chance of falling victim to scams by taking a few precautions.

Spotting the warning signs

While some deceptions are very sophisticated, in most cases it won’t take Sherlock Holmes to spot when something is suspicious.

Investment scams come in all shapes and sizes, but approaches generally fall into one of two camps – either involving false promises, or impersonating a company they trust. The tactics used by scammers and fraudsters can vary from cold-calling to authentic-looking emails.

A common trait among fraudulent investments, however they are marketed, is the promise of attractive financial returns that are well above market rates. The risk of losses is usually also played down. Get-rich-quick schemes often involve non-existent stocks and shares, or esoteric assets like art or wine.

A growing number of scams, often promoted on social media websites, involve foreign exchange trading and cryptocurrencies. According to the Financial Conduct Authority (FCA), the number of scams involving these two more than tripled in 2018-19, meaning they should be treated with particular caution. Many scams will try to use social proofing, using fake online reviews or fraudulent adverts to look credible.

Protecting ourselves

The FCA has recommended a few simple steps to help protect your clients from investment-related scams.

  • Reject unexpected offers – If your client receives a call or email concerning an investment opportunity out of the blue, there is a very high chance that it is a scam. The best thing to do is to hang up the phone or ignore this kind of correspondence
  • Check who you are dealing with – Literature and websites may appear authoritative, but they might not of course be real. The Financial Services Register can be used to verify a firm’s identity. Your client should use the contact details on the Register, rather than details provided, to avoid ‘clones’ of companies they trust
  • Don’t be rushed – Common strategies employed by fraudsters include pressure to invest before a false deadline or on special terms. Sales tactics like this should always ring alarm bells. Any investment company your client would want to deal with won’t pressure them into making important financial decisions

Remember, too, that someone could pretend to be from a reputable investment provider, perhaps one that your client is already a customer of. They could even pretend to represent our firm – or yours.

Your clients can avoid falling prey to this kind of ruse by never giving out personal information like passwords or pin numbers. These can be used to steal their identity and access accounts.

When faced with an investment opportunity, especially one that has come out of the blue or is advertised, your client should always ask themselves: ‘could this be a scam?’ They should always take the time to check who they are dealing with.

As the old adage goes, if the opportunity sounds too good to be true, it probably is.

The value of the fund's assets will go down as well as up. This will cause the value of your investment to fall as well as rise and you may get back less than you originally invested.
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