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Eagle eyed investors have saved over £2m by spotting and reporting scams to FCA

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A recent study has found that investors are starting to spot the warning signs of investment fraud by using background research and ‘gut instinct’.

The financial regulatory body, the Financial Conduct Authority (FCA), has released the findings of a study that shows that shrewd investors are using investigative and research methods to identify and report investment scams.

FCA study

The FCA recently published data from its customer helpline, which individuals can use if they have been the victim of, or suspect, a scam, such as investment fraud. The data revealed that the helpline had seen an increase of 193% in calls from investors in the past five years, and in 2022 alone over £2m was saved by those who called to report a scam.

In a further FCA study of 1,036 investors who had managed to avoid and report a scam before losing any money, it became clear that would-be investors are becoming more scam savvy and are using their ‘detective skills’ to sniff out bad investments.

Some of the most common red flags that stopped investors from progressing with an opportunity included:

  • Mistakes in marketing materials (such as websites, adverts and emails) and requests for personal information (34%).
  • Being contacted out of the blue about an opportunity (33%).
  • Being pressured into investing and ‘limited time offers’ (26%).

Investors used a blend of background research into potential investments (39%) and pure ‘gut instinct’ (32%) to differentiate between legitimate and shady investment opportunities. Encouragingly, almost 70% of respondents also warned family, friends and social media connections about the scam by sharing their experience.

Commenting on the findings of the report, Mark Steward, Executive Director of Enforcement and Market Oversight at the FCA said:

“It’s great to see so many investors being able to spot the signs of a scam and helping others to do the same. You don’t need to be a Sherlock Holmes to spot scams.”

Not all investors are lucky enough to notice the warning signs of a scam before it is too late and they have lost sometimes considerable amounts of money. Many of the investment scams that victims fall prey to involve some element of Authorised Push Payment (APP) fraud.

APP fraud refers to when scammers convince victims to willingly transfer money to another account, often in the hands of the scammer, for what they believe at the time to be a legitimate reason, such as paying for an investment, purchasing goods or services, or if they believe the scammer is a friend in urgent need of money.

Once the money is in the scammers’ account, it is moved quickly on, often overseas, and becomes virtually impossible to track down or recover, leaving the victim out of pocket and often feeling ashamed, embarrassed or that there is nothing further that can be done to compensate their loss.

However, banks have a duty to apply due diligence to their customers’ accounts and have the power to stop or delay any transactions which raise ‘red flags’, such as unusual or new recipients, and large or regular transfers.

Where banks have not carried out their responsibilities sufficiently, resulting in customers being scammed, the case can be referred to the Financial Ombudsman Service (FOS) for an independent investigation. FOS is a Government-backed body set up to investigate complaints between financial institutions and their customers.

The first thing to do on identifying a scam is to report it to your bank, Action Fraud and the police. Your bank should subsequently carry out an investigation, however if you are unhappy with their decision or do not believe they did enough to protect your money and your account, you can complain to the FOS.

The FOS will look at the circumstances of the scam and your bank’s response and make a decision based on what they think is fair and reasonable.

Commenting on investment scams and how consumers can protect themselves, the Head of Professional Negligence at TLW, Sarah Spruce, said:

“It is really reassuring to hear that investors are looking out for red flags and trusting their gut instinct when something feels off, and we would encourage anyone considering investments (even if they have done so before) to familiarise themselves with the hallmarks of a scam.

If anyone has lost money to an investment scam, and their bank is refusing to refund, we can advise about seeking a refund and help you through the process of making a claim for compensation.”

TLW Solicitors has a specialist APP fraud team with years of experience in successfully dealing with complaints to the Government backed body that deals with complaints between financial institutions and their customers, the Financial Ombudsman Service. We understand the claims process, the information that needs to be gathered and the time limits that apply.

If you, a friend or a loved one has been conned into making payments to fraudsters, then please get in touch for a confidential, no-obligation discussion. We work on a no-win no-fee basis, so you pay us nothing if your fraud claim is unsuccessful.

You can call us on 0800 169 5925, complete one of the forms below, or email info@tlwsolicitors.co.uk.

Time limits can apply and so anyone wishing to bring a claim should do so without delay.

Meet Our Team

Meet Sarah, who heads up our experienced Authorised Push Payment Fraud Claims team.

Sarah and her colleagues are on hand to help with your claim.

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