Campaign warns retirees of risk of investment fraud

The Financial Conduct Authority has launched a national campaign to warn retirees of the risk of investment fraud.

Using funds recovered from the proceeds of crime, the Financial Conduct Authority (FCA) has launched a national campaign to warn people about investment fraud and how to spot a potential scam.

Investment scams generally involve high-pressured selling, using boiler room tactics, for products which in all likelihood do not exist, including land-banking schemes, carbon credits and rare earth metals.

Martin Wheatley, chief executive of the FCA commented: 'It's shocking that these criminals can dupe even the savviest investor out of their savings and with large numbers of people at risk, it's important to know how to spot the signs of a potential scam.

'Our message is simple, don't accept a cold call. We would advise against anyone taking a risk on a firm or individual who isn't authorised by the FCA.'

Average investors lose around £20,000

The average investor loses around £20,000 and the FCA receives around 5,000 calls a year about suspected investment fraud.

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.

Those most at risk of investment fraud are people in retirement who are actively seeking an investment opportunity. One consumer told the FCA that they were called with an offer to buy some shares that they held. The deal sounded legitimate and the website looked professional. It wasn't until they were asked to pay a £5,000 bond that alarm bells rang.

Key signs that the investment may be a scam

• You are contacted unexpectedly about an investment opportunity through a cold call, email, or follow up call after receiving a promotional brochure out of the blue
• You are pressured to invest in a time-limited offer, for example, a bonus or discount is promised if you invest before a set date
• The risks to your money are downplayed, for example you are told that you will own assets you can sell yourself if the investment doesn't work as expected, or legal jargon is used to suggest the investment is very safe
• The returns sound too good to be true, for example, better interest rates than those offered elsewhere
• You are called repeatedly and kept on the phone for a long time
• You are told the offer is only available for a limited time or to a limited group of people.

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. It also secured criminal convictions against 4 individuals who were involved in unauthorised activity, including running fraudulent investment schemes.

Anyone who is considering an investment should always seek independent financial advice from a regulated professional advisor before going ahead. For further information see www.fca.org.uk/scamsmart.