Simon Hawker IFA St Albans - How to protect yourself against an investment scam

Thursday 9 March, 2017

Financial Conduct Authority figures show older people are vulnerable to investment scams

According to figures released by the Financial Conduct Authority (FCA) older people are particularly vulnerable to investment scams.  The FCA figures showed:

•    A fifth (22%) of over 55’s and a third (32%) of over 75's believe they have been targeted by an investment scam in the last 3 years

•    Over half (55%) of those who have invested in financial products did so on their own, rather than making the decision with family

•    One in eight (14%) of over 55’s spend little or no time researching financial investment products before handing over money, rising to a quarter (26%) of over 75’s
(Source: FCA)

Simon Hawker, Managing Director at Lonsdale Services, independent financial adviser and member of our St Albans financial planning team said: ‘In a previous article – ‘Be aware of scam financial letters, texts and emails' we highlighted the case of a Lonsdale Wealth Management client who had been the victim of an investment scam.  Unfortunately scammers are becoming increasingly creative in how they conduct their scams. The FCA findings also show that older people are particularly at risk of falling victim to an investment scam.  We have listed below the tactics often used by scammers so you can watch out for them. To protect yourself, the FCA recommends rejecting any unsolicited contact about investments.  Always check out any investment company on the FCA register and check that any company you intend investing with is NOT listed on the FCA Warning List.’  

The Financial Conduct Authority has revealed details of the tactics that are specifically being used to target older investors.

1. 'Act fast'
The fraudsters put people under pressure to make a decision quickly about a time-limited investment.

2. 'Keep quiet'
Figures show that many people do not discuss investment decisions with family or friends or seek financial advice.  The scammers play on the need for privacy, and ask that the deal remain secret, encouraging the victims to keep quiet. 

3. 'Everyone else is taking advantage'
Scammers reassure victims that other people have made a similar investment, they will talk of retirees who have invested with them or want to invest in the deal.

 4. 'I know what I'm doing'
Many older investors who have always managed their own investment decisions are proud of what they have learnt.  Scammers will praise victims for their investment skills to build confidence.

5. 'I deserve a decent return'
As older people have historically used to receiving higher returns on their investments they could be susceptible when scammers offer them higher returns above the market rate.  The victims may not necessarily consider the investment risks associated with the products being sold.

Simon Hawker, Managing Director, independent financial adviser and member of our St Albans financial planning team said:

The figures show that many people make investment decisions on their own without involving family.  If you are unsure about the legitimacy of a business seek advice.  We recommend reading Neil Homer our Stafford independent financial adviser's article – 'When to involve your family in financial planning.'  Using an independent financial adviser for investment advice does cost money but most ifa’s including Lonsdale Services offer a free initial consultation.  Many also offer free services to help you make informed investment decisions.  Read our article - 'Lonsdale IFA’s offer free services to help with financial planning.'  If you require free investment guidance we recommend you contact your local Citizens Advice Bureau.’

 

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