The Financial Conduct Authority (FCA) has found savvy Brits blocked £2m ($2.4m, €2.3m) of scams in 2022 by spotting warning signs and reporting them to the regulator.
Calls to the FCA’s consumer helpline have increased by 193% in the last five years – likely a result of rising awareness of scams and increased scam activity.
The FCA’s research also found that a quarter (25%) of investors who avoided a scam are taking inspiration from Sherlock Holmes to stop scammers in their tracks. Some 39% of respondents claim that their investigative or research skills are helping them to spot the clues. A further 32% are relying on pure gut instinct to distinguish between genuine investment opportunities and potential scams.
It found that ‘detective’ investors cite finding mistakes (34%) and requests for access to their personal details to secure the opportunity (34%) as the most common tell-tale signs of investment scams.
Other warning signs that made investors suspicious included being contacted out of the blue (33%) and being pressured to invest before an ‘offer’ ends (26%).
Of the 1,036 investors who have avoided investment scams the FCA surveyed, a third (33%) came across the opportunity via email, while 25% received a personal phone call. Once investors realised the opportunity was fraudulent, 42% warned family and friends, while a further 27% posted on social media to warn others.
Mark Steward, executive director of enforcement and market oversight at the FCA, 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. Our Scamsmart advice and tips together with the FCA’s warning list provides all the clues you need to sort the genuine investments from the fraudulent ones.”
Tom Selby, head of retirement policy at AJ Bell, added: “It has never been more important for savers and investors of all ages to be on their guard to the risk of scams. The cost-of-living crisis is straining the budgets of millions of households, increasing financial vulnerability and providing an ‘opportunity’ for fraudsters to tempt people to part with their hard-earned savings.
“The good news is that Brits are getting increasingly savvy when it comes to avoiding scams, spotting the tell-tale signs of dodgy investment ‘offers’ and steering clear of anything that doesn’t pass the smell test.
“While anyone can be the victim of financial fraud, pension savers over the age of 55 who can access their retirement pot flexibly are an obvious target. In many cases, someone’s pension will be the most valuable financial asset they have, with the possible exception of their house.
“If someone contacts you out of nowhere and tries to convince you to withdraw your pension and invest it elsewhere, you should be extremely wary. You’ll not only potentially pay a huge unnecessary tax bill, but you could also be putting your retirement at risk.
“In the worst-case scenario, the investment could be fraudulent and you might end up losing everything. You wouldn’t gamble your house at the casino, so why would you even contemplate taking risks like this with your retirement?”