How a financial adviser can help shield you from investment scams

Fraud poses a major threat to the financial system in the UK. Figures from UK Finance show that criminals successfully stole £1.2 billion through fraud in 2018 – equivalent to more than £17 for every individual in the country.

Of this, more than £50 million was lost as a result of investment scams. Figures show more than 3,300 people were defrauded by criminals in 2018, with scams including investments in everything from gold and property to carbon credits and cryptocurrencies.

We recently intercepted a scam on behalf of a client. Keep reading to find out more about our recent story, and how your financial adviser can be the first line of defence against investment scams.

A recent scam we thwarted on behalf of a client

Last month, we received an email purporting to be from a client. Nothing out of the usual there, of course, but this email was unusual as it asked us for details of amounts invested and current values of a Stocks and Shares ISA.

We immediately smelt a rat, as:

  • The email was badly written with odd grammar and poor phraseology
  • The email was sent from a Hotmail account, whereas we had a Gmail account for the client on our file.

Suspicious of the request, we telephoned our client who confirmed that he did not send the email. He also confirmed he didn’t have a Hotmail account.

While this was a simple phishing scam – an email/phone call purporting to be from a client or provider asking us to confirm or supply confidential information – we were able to deflect it, so it was unsuccessful.

From our point of view, the key factors were:

  • We identified that the client request was out of the ordinary and not in keeping with prior communications.
  • The grammar and phrases used in the scam email were just not right, in the sense that the email wording sounded very formal but equally the sentences weren’t written correctly.
  • There was some additional ‘inserted text’ in the email that just wasn’t normal.

In cases like this, our policy is always to telephone a client if we are unsure.

In every instance where a client requests a withdrawal from their investments, we always phone them for confirmation. This is in addition to the requirement to see evidence of bank accounts and ID.

Your financial planner is your first line of defence against scams

With the number of scams on the rise, financial planners represent the first line of defence for clients who are worried about being defrauded by criminals.

Indeed, speaking to a qualified financial adviser or planner is always sensible if you are considering any sort of investment that has been pitched to you.

The Financial Conduct Authority recommends that if you have been unexpectedly approached about an investment opportunity that you are interested in pursuing, you should first seek impartial advice from a financial adviser unconnected to the firm that has contacted you.

Finding an independent adviser or planner who is registered by the FCA means you’ll get a second opinion from someone who is not only regulated, but who also has undertaken rigorous qualifications and are committed to continuing personal development.

3 simple rules to help you avoid being the victim of a scam

If you have been approached about an investment opportunity that is offering high returns, it could well be a scam.

Read: The top 5 financial scams in the UK

Criminals behind investment scams often use cold calling to target you, and you may be pressurised to act quickly by the person claiming the opportunity is time-limited. Email, social media and letters are also used in investment scams, with criminals seeking to take advantage of recent pension reforms.

To avoid being caught out by a scam, make sure you follow these simple rules.

  1. Reject any unsolicited calls, emails, text messages or visitors to your door. Genuine and legitimate investment companies do not cold call people or contact you out of the blue.
  2. Check the FCA register of regulated companies, or the FCA warning list to ensure that a provider is genuine or has been blacklisted by the regulator
  3. If you are considering an investment opportunity, seek independent financial advice from an FCA regulated firm (such as BlueSKY).

Get in touch

If you are worried about an investment scam, or you want advice from a regulated and highly qualified financial planner, please get in touch. Email or call us on 01189 876655.