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Avoid A Financial Services Scam – How To Protect Yourself.Written on July 2, 2018 by Kirk Rice LLP

Avoid A Financial Services Scam – How To Protect Yourself.
Financial Services Questions

The Question:

I have been contacted by an adviser with an opportunity to buy shares in a company he says is going to perform really well. I am sceptical, but the promised returns are appealing, especially as savings rates are so low and I said I would think on it. He has since called me a couple of times and he is very persuasive, although I am feeling a bit pressured as he said the opportunity will soon be gone. Do you think this could be a scam?


Kirk Rice LLP answers:

The first word that pops into my head is ‘SCAM’. The Financial Conduct Authority (FCA) website has some very interesting information on ‘how to avoid investment and pension scams’. Some of the points they make, which may explain why SCAM was the first word that popped into my head, are;

Scammers usually contact you out of the blue, but contact can also come by email, post or word of mouth or at a seminar or exhibition.

How did the adviser come to contact you?

Always be wary if you are pressured to invest too quickly or promised returns that sound too good to be true.  By my count, two and possibly three of the warning signs apply to you. I would be especially wary if you do not know the adviser and you should check the Financial Services Register, as it lists all firms and advisers registered with the FCA. They even provide a separate list of unauthorized firms and individuals they have received complaints about, but if he is not on this list do not assume he is ok; the FCA may not have received a complaint yet. The FCA website; www.fca.org.uk/consumers does contain a lot of useful information (with links to other useful websites) and is well worth a visit. It is quite frightening to see they list 23 scams, consumers could be targeted with. I suspect there are scams they are unaware of especially as scammers get increasingly more sophisticated and find new methods.

Scamming has escalated since 2015, when the new pension freedom rules were introduced, and they started targeting pensions in earnest. This is firmly on the government’s radar, and in December 2017 they published a report ‘protecting pensions against scams; priorities for the Financial Guidance and Claims Bill’. The report put a figure to the scale of the problem; according to the National Fraud Intelligence Bureau (NFIB) pension scams totalling £43.9 million were reported to the police between April 2014 and May 2017. But this only covered one type of pension scam and it is thought the real figure could be over £1 billion. Remember, this is the loss from one type of scam; the FCA list 22 others!

Your pension will usually be the largest single asset apart from your home. It will have taken you most of your working life to accumulate, and it is there to give you the income you need in your retirement. But unlike your home, it is not tangible or visible, and often the only confirmation you receive from your Pension provider that you have one is an annual statement although many now offer online access. This lack of visibility raises a concern that some people may not realise they have been scammed until they reach retirement, and so the real scale of the problem may not be known for many years. The adage ‘if it sounds too good to be true, it probably is’ is one to heed here.  If you are interest in improving the return from your savings find an adviser local to you, or ask a friend who they use and would recommend, or search the FCA register.

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Any reader interested in discussing this topic further, you can telephone Peter Sharratt in Ascot on 01344 875 000, or email info@kirkrice.co.uk

Please note: answers are given for general guidance only and specific advice should be taken before acting on any of the suggestions made.