Be a ScamSmart Investor
Scams are increasingly sophisticated. Find out more how to protect yourself and how to spot the warning sights that a firm or website could be a scam.
Scams are increasingly sophisticated and fraudsters are generally articulate, financially knowledgable and have professional websites with testimonials and materials that look like the real thing.
Warning signs of a fraud include:
If it sounds too good to be true, it probably is.
Unexpected offers should be rejected.
If you are contacted out of the blue about an investment opportunity, it could be a high-risk investment scam.
Fraudsters often cold-call, but they can also use email, post, word of mouth, run seminars or have a stand at an exhibition.
The FCA has a useful website where you can check details of any investment opportunity you have been offered.
If you get cold-called, the safest thing to do is to hang up. If you get unexpected offers by email or text, it is best to simply ignore them. Callers may pretend they are not cold calling by referring to a brochure or an email they sent you which is why it is important to know how to spot some other warning signs:
Are they applying pressure on you to invest quickly? They might offer you a bonus or discount if you invest before a set date or suggest it is a limited time offer.
Do they downplay the risks? They can suggest you can sell the investment back to them for what you paid, or use jargon to suggest the investment is very safe.
Do they promise tempting returns? Such as returns that are too good to be true, including better interest rates than you would receive elsewhere or high potential future returns.
Are they suggesting it is an exclusive offer? They might claim that the investment is limited, not available to all and even ask you to not tell anyone else about it.
Have they asked you to transfer money? This is the aim of the fraud. Genuine financial services firms are unlikely to ask you to transfer money without a meeting and lots of paperwork.
6 practical steps to avoid the scammers
1. Check the firm is authorised by the Financial Conduct Authority (FCA)
Almost all financial services firms must be authorised by the FCA – if they are not, it is probably a scam. You can Check the Financial Services Register to see if a firm is authorised or registered by the Financial Conduct Authority.
Always access the Register from the FCA website, rather than through links in emails or on the website of a firm offering you an investment. Even ours!
Ask for the firm’s ‘firm reference number’ (FRN - ours is 122483) and check that the FRN and contact details are the same as on the FCA Register. If there are no contact details on the Register or if the firm claims they are out of date, it’s probably a scam - call the FCA Consumer Helpline on 0800 111 6768.
If you use an unauthorised firm, you will not have access to the Financial Ombudsman Service or Financial Services Compensation Scheme (FSCS) if things go wrong – and you are unlikely to get any money back.
Not all investment products are regulated by the FCA - these include wine, horses, gemstones and this link provides more information on unregulated investment products.
If you are dealing with an overseas firm, you should be extra alert and check with the regulator in that country and also check the scam warnings from foreign regulators.
2. 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 FCA authorisation.
Even if a firm is not on the list, it may still be a scam – firms change names and details all the time.
3. Check it is not a ‘clone firm’
A common scam is to pretend to be a genuine firm (called a ‘clone firm’) which it is vital that you always check and use the contact details on the FCA Register and not the details the ‘clone firm’ gives you.
You can also check the firm’s details with directory enquiries or Companies House to make sure they are the same.
4. Get impartial advice or a second opinion
Always get independent advice before investing – if you are in any doubt, get a second opinion from an adviser at a different firm.
5. If you are suspicious, report it
You can report the firm or scam by contacting the FCA Consumer Helpline on 0800 111 6768 or using the FCA 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.
6. Avoid the ‘Suckers List’ and 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 via the ‘suckers list’. Any follow-up scam may be completely different or could be related to a previous fraud, such as an offer to get your money back or to buy back the investment after you pay a fee.
Financial Services Compensation Scheme
City Asset Management Plc is covered by the Financial Services Compensation Scheme (FSCS). The FSCS is a statutory fund of last resort that can pay compensation if a financial services firm is unable, or unlikely to be able to pay the claims laid against it to those who have direct losses as a result of the firm’s failure.
Established under the Financial Services Markets Act 2000 (FSMA), the FSCS is an independent body and is there to provide you with free access to a source of redress. FSCS is funded by the financial services industry and makes no charge to consumers.
Please be aware that there are different limits for different financial services and product offerings. For further details on FSCS protections, please see the FSCS website at www.fscs.org.uk
The FSCS compensation scheme covers your investments with automatic protection of up to £85,000* per person per firm, if the investment firm you invest with goes out of business. The FSCS can pay compensation if the firm concerned has failed and cannot return your investments or money owed, and you lose money because of:
· Bad or misleading investment advice;
· Negligent management of investments;
· Misrepresentation; or
· Fraud.
All client money and assets are fully segregated from our own funds in accordance with the Financial Conduct Authorities (FCA) Client Money and Asset Rules.
The FSCS also covers Self Invested Personal pensions (SIPPs) which are as type of ‘wrapper’ for a bundle of products can include insurance products, investments or deposits. If the provider of the underlying product held within the SIPP fails, the FSCS compensation limit depends on the type of product held within the SIPP.
For joint accounts, each individual account holder is eligible to claim up to the relevant FSCS limit.
If an overseas entity which holds your money or assets becomes insolvent, then the FSCS will not provide any compensation to you.
Please note that these protections are the same for both Retail and Professional clients (as defined by the FCA)
*Correct at June 2021. This limit is subject to change and at the discretion of the FCA and FSCS.