More than seven out of 10 savers and investors have been approached by scammers in the past three months, according to Sarah Pritchard, executive director at the Financial Conduct Authority (FCA).
In a speech delivered at the Financial Crime Summit, Pritchard compared financial con artists to Covid, a “complex and ever-evolving enemy” that requires all sections of society to act to fight it.
Between April and July 2022, there has been an increasing number of people reporting investment scams to the Financial Ombudsman Service, while the techniques used by scammers are becoming more sophisticated.
While a large proportion of fake investment opportunities involved cryptocurrencies and the promise of huge returns, the cost-of-living crisis – including false access to rebates from utility companies – has also played a major role in more recent criminal strategies to tempt people to part with their cash, as explained by Tom Selby, head of retirement policy at AJ Bell.
“It is a depressing fact that the more vulnerable people become, the more active financial fraudsters are,” he said.
“While people of all ages can fall victim to scammers, those who are able to access their retirement pot – potentially the biggest asset they own – will inevitably be a prime target.”
While huge efforts continue to be made to protect people from thieves, ultimately the surest way to avoid becoming a scam victim is to know the tricks they use and not hand over your money in the first place, said Selby.
Most people at some point will have received a phone call from someone they don’t know claiming to offer an incredible investment opportunity for their savings or a ‘pension review’ service.
“If this happens, hang up immediately,” advised Selby. “Equally, don’t respond to text messages, emails or social media contact from someone you don’t know. In all likelihood this will be a scammer phishing for victims, so don’t take the bait.”
Some swindlers prefer to act in person and continue to knock on doors instead of using emails or the phone. Their targets are older people that they think are more likely to be vulnerable.
“Make sure you only deal with FCA-regulated advisers – this is particularly important as if you are sold an investment by an unregulated individual, you won’t have recourse to compensation,” he said.
Scammers often promise double-digit returns through exotic investments in far-flung locations or cryptocurrency.
“A plantation in South American or a hotel room in Spain might not exist or not have been built yet, so don’t hand over your cash unless you’re 100% confident you’re being sold a genuine, bona fide investment,” he said.
Additionally, if a company you’ve never heard of says it can deliver guaranteed returns of any amount, don’t touch them with a barge pole. Nothing is guaranteed in investments, he noted.
Finally, Selby said you should never be “forced into doing something you aren’t comfortable with and might regret by a pushy salesman or saleswoman desperate to boost their commission.”