Advisers Have A Key Role To Play In Stamping Out Financial Fraud

Barely a week seems to go by without a new warning about a scam involving investment fraudsters.

Recently, Action Fraud, the fraud & cybercrime reporting centre, revealed that in 2018 around £197million was lost to investment fraud, with victims losing £32,000 each on average.

It also revealed that a growing number of fraudsters are using emails and social media to target victims who are then directed to increasingly sophisticated clone websites.

Cryptocurrency, shares and bonds were among the most common scams reported, with over-55s the main target of the fraudsters.

Action Fraud is now urging people to check that investment ‘opportunities’ are legitimate before they part with their hard-earned cash.

Shocking Statistics

Statistics released by the organisation are shocking:

• A fifth (22%) of over 55s and a third (32%) of over 75s believe they have been targeted by an investment scam in the last 3 years
• Over half (55%) of those who have invested in financial products did so on their own, rather than making the decision with family
• One in eight (14%) of over 55s spend little or no time researching financial investment products before handing over money, rising to a quarter (26%) of over 75s

Action Fraud believes that pension freedoms and low interest rates meaning poor returns on savings have encouraged fraudsters to target older people.

The Financial Conduct Authority (FCA) says people need to do their homework before signing up to any new investment. This includes checking the FCA register and its warning list of firms to avoid.

“If in any doubt – don’t invest,” is the FCA’s overriding message.

The FCA has launched a ScamSmart campaign to help protect consumers from investment fraud. It features an interactive tool which will help people find out more about the risks associated with a particular investment.

Do Your Homework

Mark Steward, FCA Director of Enforcement, said: “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 are targeting our growing over 55 population because they are more likely to have money to invest. They may pressure you to make a quick decision or try to make you feel stupid for not taking up their bogus offers.

“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.”

Considering that an adviser is likely to be most people’s only face-to-face dealings with a finance professional it’s worth thinking about how this privileged position can be used to help cut fraud.

Be An Educator

Financial advisers already act as educators whose roll alongside financial planning it to demystify what is seen by many as an opaque world.

So, informing people about how to avoid scams from whatever direction they may come is a natural extension of this role and another way of adding value to the service on offer.

From a commercial point of view, educating potential clients is a way of making them feel more relaxed about investing as research suggests some are too scared to invest at all for fear of being scammed.

It’s important not to instil fear where fear doesn’t exist but by ensuring clients are well-informed so they can distinguish between a scam and a legitimate investment you are not only helping to protect their assets but also improving their confidence in the legitimate markets.

It goes without saying that at Adviser PR we can help with all the areas we’ve discussed above. You can call us on 07543 195476 or email contact@adviserpr.co.uk.

Alternatively, if you run another type of business and would like help with your PR, please contact our parent company, Topline PR Ltd.