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Don’t let 2016 be the year of the financial fraudster!

Unfortunately, I was contacted twice just before Christmas by people who had been targeted by financial fraudsters.

At first glance it wasn’t obvious that either case was a scam. People carrying out investment fraud present information in a professional way, using industry jargon to make them sound credible – and ultimately very believable. They are well spoken and appear knowledgeable. They send glossy magazines with a cover letter on smart headed paper and can refer you to an impressive looking website.

Fraudsters claim to be able to provide excellent returns on your investment. Investments and tax planning can be complicated subjects, and for people who aren’t experienced in these areas it is extremely difficult to see past this slick presentation.

The Financial Conduct Authority (FCA) is responsible for making sure that consumers get a fair deal and regulates the conduct of more than 70,000 businesses. Regarding looking out for scams the FCA website advises: “If it sounds too good to be true, it probably is!” - this is certainly sound advice but assumes sufficient knowledge and understanding of investments to be able to make a comparison to something else. The FTSE 250 provided a total return of 11.43% over the year ending 10 December 2015. Relative to this, would someone offering a guaranteed return of 10% pa seem too good to be true?  

Once it becomes clear that you have been a victim of fraud there is little you can do. Action Fraud, the UK’s national reporting centre for fraud, say that £1.2 billion is lost every year to investment scams in the UK. Due to the scale of the problem it is almost impossible for all cases to be investigated by police, who have limited resources and often cases of fraud are just recorded for statistical purposes.

Even when cases are investigated the likelihood of recovering money is extremely low. Perpetrators are careful to ensure they cannot be traced. When you look closely you find that the impressive website contains no individual names and the exclusive address listed is a PO Box, hired office or simply made up.

People who have been victims of fraud can feel vulnerable and foolish and will often be desperate to make amends. Knowing this, fraudsters will make contact with the victim claiming that they are a law firm or financial services company and that, for a fee, they can catch the original fraudster and recover lost money. This is known as ‘fraud recovery fraud’.

Though a huge problem that causes great stress for victims, investment fraud is not widely discussed in the press and people are not well informed of the dangers.

How can you protect yourself from fraudsters?

If you are contacted via an unsolicited call by a company claiming to offer an investment opportunity you should tell them that you are not interested and hang up. If you are uncertain about whether the person is genuine you can ask for their FCA number to see if they are regulated by the body. Just go to http://register.fca.org.uk/ and type in the number – if a firm is not registered it is likely to be fraudulent. There is also an FCA warning list which clients can check for fraudsters by going to the following website - http://scamsmart.fca.org.uk/warninglist/.


If you are still unsure you can contact us at Equilibrium on 0161 486 2250 and we will be happy to review the information with you. As investment professionals we can usually tell you whether someone is genuine within a couple of minutes. So do get in touch with us if you are not sure - it is always better to be safe rather than sorry!