A financial adviser can protect you against financial crime

Financial Crime

An FCA study found that over 55s were more likely to be scammed, and with over £2million in pension pots targeted by scammers in just five months last year, it’s no wonder this age group are the focus of their attacks. Whilst we might hope to spot the signs of financial crime, it’s not always easy to do this yourself, and you’re less likely to become a victim with a financial adviser by your side.

Furthermore, Saltus Wealth Index found 49% of the 1,000 surveyed had been a victim of a financial scam. And the likelihood of those being targeted increased with the value of their wealth, with a third of those being targeted with wealth between £250,000-£500,000, over 50% with between £1 million and £2 million, and 65% with over £3 million. So there is even more reason to make sure you have the right team around you, advising you on where to invest your money and how to keep it safe.

Avoid becoming a victim of a financial crime

Anyone can fall victim to financial crime due to the ever-increasing sophistication of scams. Organised criminals use a wide range of tactics, playing the long game when defrauding a high-net-worth individual. And in times of low-interest rates, it can drive people to search for alternative solutions to get higher returns on their wealth. The FCA study also found that a quarter of those seeking higher returns were investing in unregulated products, such as land or wine, and 13% of them had no idea their investments were unregulated and the consequences of that – an investment doesn’t need to be fraudulent to have disastrous outcomes after all.

The mantra “if it’s too good to be true then it probably is” needs to be your first flag. When you use an experienced financial planner or adviser, they have the expertise to spot bogus financial scams or risky investments. By relying on their knowledge, you will have better protection against fraud.

The Financial Conduct Authority (FCA) is continually working to highlight fraudulent activities and has started an initiative called ScamSmart. It’s an ever-growing challenge in a world where highly articulate fraudsters are increasingly carrying out scams.

Financial criminals use professional looking methods, websites, and materials to scam people, especially through search engines like Bing, Google, and even social media platforms. They can even go to the extent of ‘brand cloning’ to create adverts to dupe people; Martin Lewis from MoneySavingExpert recently took Facebook to court following over 1,000 scams abusing his name appearing on the social media platform. Scammers deliberately target consumers interested in investments and take well-known reputable figures to build a sense of trust before defrauding consumers of their money.

How to spot a financial scam

Here is a list of typical flags to watch out for and to stop you from falling victim to financial crime:

  • Avoid cold calls or unsolicited contact – trustworthy financial planners and advisers will not ring you out of the blue to advise you of a “great investment opportunity”. This is likely to either be a scam or a very high-risk investment, where you are likely to lose your money. Also, they may have sent something in the post or emailed you, giving you false reassurance that they are not cold calling you.
  • Be careful of the information you give out – if you don’t feel comfortable, then refuse to provide the information. You should never give out sensitive information such as your address, phone number, passwords or banking information, to name but a few, especially to someone you don’t know. You can find some guidance about online safety from the Information Commissioner’s Office here.
  • Beware of online scams – emails and social media are increasingly used to target people for financial scams. Please see our recent blog on crypto scams.
  • Unrealistic returns – fraudsters might try to tempt you into glossy sounding investment schemes with great interest rates. But similarly, there have been some reported cases where fraudsters try to win people’s confidence by offering lower returns. If in any doubt, we recommend getting the investment checked by a financial planner.
  • Time-pressured investments – if you are being pushed to invest and being told the opportunity is only available for a short time, this is a big flag. scammers may use tactics such as offering discounts and bonuses if you invest by a set date. You should never feel pressured to make a decision about your money.
  • Flattery or false authority – financial criminals may appear very friendly and charismatic as they want to win your trust. They aim to build a friendship with you, so you are lured into a false sense of security. They might use false websites and literature to convince you of their authority and even claim to be regulated. Always check the Financial Services Register to see if the FCA authorises them.
  • Unconventional commission – always double check the commission arrangements or fee structure to ensure it is safe and transparent. We charge fixed fees, so it’s always clear what you’re being charged.

The FCA has also released a Warning List of unscrupulous financial firms to avoid offering unauthorised and unregulated investment opportunities or products. Never transfer money to anyone offering an investment scheme unless you are 100% sure they are regulated and authorised by the FCA.

Have you ever fallen victim to a financial crime? Then, before committing to any new investment, always get advice from our financial planning team to ensure the scheme is legitimate. We’re here to help you make the most of your money as safely as possible and avoid falling victim to financial crime.

For financial advice or to discuss an investment scheme, please get in touch with our independent financial planners.