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Protecting yourself from investment scams

Did you know an estimated £1.2bn is lost to investment scams each year, according to Action Fraud - the UK’s fraud and internet crime reporting centre? Surprisingly, around 90% of these crimes still go unreported, and with hundreds of people being targeted every day, these numbers are likely to be even higher. 

It’s very important to remain vigilant when you are looking to access the money you have invested in your pension. The average victim of an investment scam loses £20,000 – sometimes more. 

So what is an investment scam?

Remember to trust your instincts. If you think the offer sounds too good to be true, it probably is!

Investment scams are a form of fraud where there is a high risk that you could lose some, or all, of your money. Often the investment opportunities that scammers offer don’t really exist - or don’t have the rewards being promised. Scammers can appear professional and trustworthy, so even experienced investors may fall victim to these schemes. 

How to spot an investment scam

Scammers are always changing their tactics so the following are some of the red flags that could help you to spot an investment scam: 

  • Be alert to any unexpected contact about investment or pension opportunities. You might receive a call out of the blue, from someone you haven’t spoken to before.  You might also get an email, a text message, or some information in the post that is immediately followed up by a call.
  • Scammers often use very convincing tactics to get you to sign up. Beware of anyone trying to pressurise you into making a decision.
  • Scammers will make an investment sound very appealing and will often suggest that it’s less risky than it is.  
  • Offers made by scammers often sound too good to be true. For example, you might be offered better interest rates or returns than you’ve seen elsewhere. 
  • Scammers are persistent and will often try to form a relationship with you in an effort to build your trust. Beware of anyone who calls you repeatedly and/or anyone who tries to keep you on the phone for long periods of time. 
  • You might be told that you’re receiving a very special and/or limited offer. 
  • You might be told not to tell anyone about the offer you’ve been given. But talking with trusted friends and family about any investment offer you’ve been given could help you spot a scam.
  • Fraudsters are known to target previous victims of investment fraud, claiming that they can recover lost money. You might be asked to pay an upfront fee but these companies will not get back your money.  
  • Some companies that run scams base themselves overseas in order to avoid regulatory requirements. Be cautious if a company that is based overseas contacts you with investment opportunities. 

How to protect yourself from investment scams

  1. Get to know the red flags above that could suggest a scam. The FCA ScamSmart website offers helpful support about what you can do to spot investment fraud.
  2. More information about pension scams can be found at www.pension-scams.com, check out the leaflet there.
  3. Make sure that the company or financial adviser you’re dealing with is authorised by the UK Regulator – the Financial Conduct Authority (FCA). You can check their Financial Services Register and get more information on unauthorised firms overseas
  4. The FCA also have a warning list that you can check to help stay ‘scam smart’ before you go ahead with any investment.  
  5. Reject any cold calls that you receive and please don’t give out any personal or financial information until you are sure you are dealing with a reputable company. Find out more about cold calls.
  6. It is important you know other tell-tale signs that suggest an investment opportunity is likely to be high risk or a scam.
  7. If you are worried about scams or would like further help, please contact us on 0207 004 8888, Monday to Friday 9am to 5pm.

Remember to trust your instincts. If you think the offer sounds too good to be true, it probably is!

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