Anyone can become a victim of investment fraud and the investment market is extremely vulnerable to abuse by fraudsters.
£1.2 billion is lost to investment scams in the UK, with share sales, wine investments, land banking and carbon credits commonly used by fraudsters to target potential investors. Many people have lost their entire life savings to investment scammers. Many emerging markets remain unregulated making it very difficult for authorities to enforce good working practices.
What you should know
Scammers will cold-call you by telephone and try to sell you investments in emerging markets that they claim will lead to financial gains above the rates of established investments like ISAs. In reality the item offered may not exist or is worthless.
An emerging investment fraud is pension liberation, also known as 'pension loans' and 'pension scams'. This is a transfer of a scheme member’s pension savings to an arrangement that will allow them to access their funds before the age 55. Pension liberation can be illegal where members are misled about key consequences of entering into one of these arrangements. This could be because they’re not informed of the tax consequences, fees involved or how the remainder of their pension savings are invested. Please visit our pension fraud page for further information.
Be wary of any investment company cold-calling you – they may be fraudsters.
Often the scammers will give you details that you might think only a genuine investment company will have. They may have details of previous investments you have made, shares you hold and know your personal circumstances. Be aware the scammers will do their homework and make it their business to know as much about you as possible.
The scammers will often call you a number of times in an attempt to form a friendly relationship. If you respond in any way they will persist, try and build trust and may eventually persuade you to part with your money. Having obtained some money from you they will probably call again and try to persuade you to “invest” more money, perhaps in a different commodity.
Scammers may say they are from a reputable investment company, some will say they are stockbrokers or consultants. Always seek independent financial advice before you commit to any investment including checking with the Financial Conduct Authority (FCA) to see if they are a registered company – do not rely solely on Companies House Data.
Be wary of companies trying to recover money from lost investments on your behalf for a ‘one off’ fee – this could be a recovery room fraud trying to scam you again! Similar to the initial investment they are likely to know all about your previous investment history.