Investors – in particular those aged over 55 – have been urged by the regulator to take their time to check that investment opportunities are legitimate before they hand over their cash.
The Financial Conduct Authority’s (FCA) warning comes after its new study found that a fifth (22%) of over 55s and a third (32%) of over 75s believe they’ve been targeted by an investment scam in the last three years.
Yet despite the high number of people potentially contacted by these scams, one in eight (14%) over 55s who have invested in financial products (such as stocks and shares) spend little or no time researching them before handing over money.
Over 75s meanwhile, who are most likely to say they have been contacted by an investment scam, are also the group most likely to do little or no research – at 26%.
The most common check carried out before investing in a financial product was to look at a company’s website (41%). However, investment fraudsters and unauthorised firms are known to create highly professional-looking websites to entice victims, reinforcing how other checks need to be done to make sure an investment is genuine. See below for the FCA’s top tips.
The FCA says the recent pension freedoms and low interest rates offering poor returns on savings are making over 55s an increasingly attractive target for fraudsters. It adds that on average, victims of investment fraud lost £32,000 each last year. Sadly, it’s hard to get your money back if you’ve been scammed by an unregulated company.
Protect yourself from fraud
The FCA’s top tips for protecting yourself from investment fraud are as follows:
- Reject unsolicited contact about investments.
- Before investing, check the FCA Register to see if the firm or individual you are dealing with is authorised, and check the FCA Warning List of firms to avoid.
- Get impartial advice before investing.
Mark Steward, director of enforcement at the FCA, says: “Making a significant financial investment is an important decision - be prudent, do your homework and be especially on guard if contacted out of the blue by someone you don’t know.
“Fraudsters may pressure you to make a quick decision or try to make you feel stupid for not taking up their bogus offers. But no investment decision should be rushed. Be sceptical. Be suspicious. Ask questions and get answers you can verify. And remember, if you receive an unsolicited call about an investment opportunity that sounds too good to be true then it probably is. The best thing to do is hang up.”
If you think you’ve been hit by an investment scam, report it to the FCA and to Action Fraud.