Reject unexpected offers
If you’re contacted out of the blue about an investment opportunity, chances are it’s a high-risk investment or a scam.
Scammers usually cold-call but contact can also come by email, post, word of mouth or at a seminar or exhibition. Scams are often advertised online too.
If you get cold-called, the safest thing to do is to hang up. If you get unexpected offers by email or text, it’s best to simply ignore them.
You can register with the Telephone Preference Service and Mailing Preference Service to reduce the number of letters and cold calls you receive.
Callers may pretend they aren’t cold calling you by referring to a brochure or an email they sent you – that’s why it’s important you know how to spot the other warning signs.
Spot the warning signs
- Unexpected contact – Traditionally scammers cold-call but contact can also come from online sources e.g. email or social media, post, word of mouth or even in person at a seminar or exhibition.
- Time pressure – They might offer you a bonus or discount if you invest before a set date or say the opportunity is only available for a short period.
- Social proof – They may share fake reviews and claim other clients have invested or want in on the deal.
- Unrealistic returns – Fraudsters often promise tempting returns that sound too good to be true, such as much better interest rates than elsewhere. However, scammers may also offer realistic returns in order to seem more legitimate.
- False authority - Using convincing literature and websites, claiming to be regulated, speaking with authority on investment products.
- Flattery – Building a friendship with you to lull you into a false sense of security.
Check if a firm is FCA-authorised
Almost all financial services firms must be authorised by the FCA – if they’re not, it’s probably a scam.
Check the Financial Services Register to see if a firm or individual is authorised or registered with them.
Always access the Register from their website www.fca.org.uk, rather than through links in emails or on the website of a firm offering you an investment.
Check if the firm’s ‘firm reference number’ (FRN) and contact details are the same as on our Register.
If there are no contact details on the Register or if the firm claims they’re out of date, call the FCA's Consumer Helpline on 0800 111 6768.
If you’re dealing with an overseas firm, you should check with the regulator in that country and also check the scam warnings from foreign regulators.
If you use an unauthorised firm, you won’t have access to the Financial Ombudsman Service or Financial Services Compensation Scheme (FSCS) if things go wrong – and you’re unlikely to get your money back.
If you use an authorised firm, access to the Financial Ombudsman Service and FSCS protection will depend on the investment you are making and the service the firm is providing.
Not all investments are regulated by the FCA (eg wine) – find out more about unregulated investment products.
Check it’s not a ‘clone firm’
A common scam is to pretend to be a genuine firm (called a ‘clone firm’).
Always use the contact details on the Register, not the details the firm gives you.
You should also check the firm’s details with directory enquiries or Companies House to make sure they’re the same.
Check the FCA Warning List
Use the FCA Warning List to check the risks of a potential investment – you can also search to see if the firm is known to be operating without our authorisation.
Even if a firm isn’t on the list, it may still be a scam – firms change names and details all the time.
Get impartial advice
You should seriously consider seeking financial advice or guidance before investing. You should make sure that any firm you deal with is regulated by us and never take investment advice from the company that contacted you, as this may be part of the scam.
The Money Advice Service has information on investing and about how to find a financial adviser. Alternatively, you could get further information from a group that represents advisers such as PIMFA.
Read more about how to find an adviser.
If you’re suspicious, report it
You can report the firm or scam to the FCA by contacting their Consumer Helpline on 0800 111 6768 or using thier reporting form.
If you’ve given your bank account details to a firm you think may be operating a scam, tell your bank immediately.
If you've agreed to transfer your pension and now suspect a scam, contact your pension provider straight away. They may be able to stop a transfer that hasn't taken place yet.
Be wary of future scams
If you’ve already invested in a scam, fraudsters are likely to target you again or sell your details to other criminals.
The follow-up scam may be completely separate or related to the previous fraud, such as an offer to get your money back or to buy back the investment after you pay a fee.
Update 2 July 2020
F C A sets out plans to improve pension transfer advice
Members of most defined benefit schemes (including the LGPS) must get financial advice if they wish to transfer their benefits to a defined contribution scheme where the transfer value is £30,000 or more.
The Financial Conduct Authority (F C A) has expressed concern about the high levels of unsuitable advice that advisers have given to members.
On 5 June 2020, the FCA set out a package of measures to improve the quality of pension transfer advice. This includes banning contingent charging, with limited exceptions. This type of charging is where the adviser is only paid if they recommend a transfer. The FCA believes that such arrangements create a conflict of interest. The result of this ban, though, may see members paying more for advice. The FCA will also allow advisers to provider a shorter, cheaper form of abridged advice. Abridged advice can only result in a recommendation not to transfer or a statement that it is unclear whether the consumer would benefit from a pension transfer without giving full advice. Members wishing to transfer out who are required to get financial advice will still need to get the full advice.
In addition, the FCA has also published information to help customers check the suitability of advice previously given and information to help customers who are considering transferring out.