Over-55’s warned to watch out for investment scams

A woman scammed

Savers are increasingly looking to move their hard earned cash into investments that should deliver better returns – and it’s no wonder.

Using the rule of 72, which states that if you divide said number by a given interest rate you’ll see how long it takes to double your money, we see that in 2008, when the Bank of England (BoE) set rates at 4.5%, it would have taken 16 years.

But with the BoE rate at 0.5%, where it has been for the past seven years, it would take you 144 years.

At Moneywise we’re always eager to tell people how to start investing and the best place to do it online, but we’re not the only ones doing this, and, unfortunately, a lot of the information out there is shady.

Regulator the Financial Conduct Authority (FCA) has commissioned and published a study into investment scams aimed at over-55s as part of its new ‘ScamSmart’ campaign, which starts today.

The FCA’s main worries relate to the sale of ‘unregulated products’ - buying into things such as wine, land, art and diamonds. This category also includes unregulated investment funds, often based outside the UK, that dedicate money to less common investment products and activities such as film production, forest plantations and foreign property.

With 23% of the people polled as part of the FCA’s research saying that they’re considering investing in unfamiliar vehicles in the future, the regulator has plenty of sobering news.

Here are some of the numbers it revealed:

  • 26% of over 55s have bought into an unregulated investment.
  • Those considering investing in unregulated products in the coming year will look to invest an average of £40,000.
  • 27% of those who have fallen victim to investment fraud bought an unregulated product through an unauthorised firm.
  • 40% of those targeted by firms with unsolicited investment calls report a sharp rise in volume of said calls.
  • Over 65s with more than £10,000 saved are three and a half times more likely to fall victim to this type of fraud.
  • 45% of those investing in unregulated products do so without getting any professional advice or checking publically available information, such as the FCA’s warning list.


How can I avoid being a scam victim?

Mark Steward, director of enforcement at the FCA says: “You don’t need to be gullible to lose money to a scam or fraud. Fraudsters target financially sophisticated people too, who often don’t like to ask what might sound like silly or basic questions.

“Be sceptical. Be suspicious. Ask questions. Do your own checks before investing; check the FCA ScamSmart website, the FCA warning list and the FCA register to see if those that are asking for your money are the real deal. If you do experience investment fraud or suspect it, report it; our research found that 60 per cent of those that have experienced investment fraud have not reported it, so the problem could be greater than we know and by reporting it you are helping us to protect others".

Adding a bit of stardust to the proceedings, Nick Hewer, the presenter of Channel 4’s Countdown, who you may also remember as Lord Sugar’s adviser on The Apprentice, is supporting the campaign.

He says: “I too have been targeted by unsolicited calls from scammers and would advise that if you ever receive a call offering you the investment of a lifetime, just put the phone down, as I did.

“Go by the rule that if it sounds too good to be true, then it probably is. If the investment was that good, everyone would be investing; if you are still in two minds, go to the FCA website and check the Warning List. My best advice: when you receive a cold call – just put the phone down.”

Penny Cogher, pensions partner at Irwin Mitchell add some words of warning: "The FCA’s figures are shocking and highlight the risks that come with pensions freedoms... Victims of pensions fraud can appeal to the Financial Ombudsman Service (FOS) for help. However, FOS awards are capped at £150,00 and any decision made by the Financial Ombudsman Service is binding and cannot subsequently form the basis of further court proceedings - even if the claimants have suffered more than the maximum award of £150,000. If their claim is more than this they might have to consider court proceedings to recover their money."

It’s understandable that if you have been caught out by a scam, it would be hard to admit to – especially if the rest of your family sees you as the financially savvy one.

But if you think you’ve been scammed, please get in touch at scamwatch@moneywise.co.uk.

For more information, or to report a suspected scam, you can check out the FCA website at www.fca.org.uk/scamsmart.

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