UK financial regulator finds increase in investors detecting scam warning signs

The UK’s Financial Conduct Authority (FCA) released new research on investment scams on 21 February, which finds that over £2 million was saved in 2022 by investors who informed the regulator of a suspected scam before money was lost.

According to the FCA, which is launching its latest ScamSmart campaign to help investors identify and avoid investment scams, the research shows that more investors are actively spotting scam warning signs and reporting their suspicions to the FCA via its consumer helpline. With calls to the FCA’s consumer helpline increasing by 193% in the last five years.

The new research on investment scams finds that two in five respondents to an FCA commissioned survey of just over 1000 UK adults, who have avoided a suspected scam relating to their investments, claim that their investigative or research skills helped them identify the warning signs of a suspected scam. Gut instinct was cited by a further 32% of respondents in distinguishing between genuine investment offers and potential scams.

The two most common warning signs of a possible investment scam identified by respondents were: (1) mistakes in the correspondence/call (34%) and (2) requests for access to personal data to secure the opportunity (34%). Other warning signs included: being contacted out of the blue (33%) and time pressure being used to encourage a quick investment decision (26%).

The FCA’s latest ScamSmart campaign calls for all investors to check its Warning List of unauthorised firms before making an investment decision.

Commenting on the new research, Executive Director of Enforcement and Market Oversight at the FCA, Mark Stewart, said “Scammers are becoming more and more sophisticated, coming up with different tactics, such as impersonation texts or calls, and using the cost of living pressure as a way to tempt investors into false opportunities. Once money has been lost in this way, it’s difficult to get back, so if something seems too good to be true, it probably is. 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.”