Scammers posing as investment experts are targeting people aged over 55, resulting in consumers being urged to think twice before accepting any unsolicited “advice”.
The Financial Conduct Authority (FCA) has issued this warning after it found that only two-in-five people believe they would know how to spot an investment scam.
Fraudsters are particularly targeting people aged over 55 as they tend to have more money to invest.
More than half of people (53%) in this age group believe they have to act quickly when making investment decisions, and this is being exploited by fraudsters who often offer one-time-only deals.
The average victim of investment fraud lost £32,000 in 2016, according to data from Action Fraud.
Common tactics used by fraudsters, which investors should watch out for, include:
- Offering lucrative returns above the market rate and downplaying the risks of the investment
- Using flattery to make potential victims feel good, such as praising them for being a knowledgeable investor
- Saying that the deal is only available to the victim and asking them to keep it a secret
- Saying that other clients have invested or want in on the deal (known as ‘social proof’). Around 45% of over-55s surveyed by the FCA agreed that investment opportunities are more attractive if you know of others who have made similar investments
- Putting victims under pressure to invest in a time-limited offer.
How to check a firm is legit
The FCA says consumers should reject any unsolicited contact regarding investments and check whether a firm is authorised by using the Financial Services Register.
Investors should also check the FCA warning list of firms to avoid.
Mark Steward, director of enforcement at the FCA, says: “Be alert to the warning signs like being contacted out of the blue, promises of low risk and/or guaranteed above market returns, special deals just for you, time pressure and, very often, flattery.
“Be vigilant. Don’t let them push you into making a decision and parting with your money. Question their claims. Check the Financial Services Register and seek impartial advice. If in any doubt – don’t invest.”