The Financial Conduct Authority says it has been swamped with enquiries about possible scams, with 16,400 reports in the six months between April and September 2021 – up nearly a third from the same period in 2020.
The top reports included concerns on cryptoassets, boiler room and recovery room scams, the regulator said.
As a result, the watchdog opened more than 300 cases related to possible crypto businesses not registered with the FCA – as many “may be scams”, it said.
At the moment, the regulator has 50 live investigations, including criminal probes, into unauthorised companies.
As more firms look to enter the UK consumer investment market, the FCA was forced to stop a quarter of applications – an increase from a fifth in the last financial year.
Nine of these businesses were not given authorisation as the regulator believed that people responsible for unsuitable advice were trying to “avoid the consequences of their actions by moving or setting up new firms, or where individuals set up and sought authorisation for a new firm before their existing firm started to receive complaints about poor past advice”.
Sarah Pritchard, executive director of markets at the FCA, said: “Consumers need to have confidence when making investment decisions and the data we’ve published today shows how prevalent scams can be.
“Before investing, check you know who you are really dealing with, check if they are authorised by the FCA and do your research to understand the risks that might be posed. Find out how to avoid scams on the ScamSmart website and get tips on investing safely on the InvestSmart website.”
Stricter controls on financial promotion
Matt Burton, chief risk officer at Quilter, said that while “considerable progress” has been made in the fight against scams, “they still represent an all too real threat to savers and investors”.
“It’s not at all surprising that cryptocurrencies make up the lion’s share of these enquiries, with almost three times more cryptocurrency scams reported to Scamsmart than the second most reported product.”
But the expected application of financial promotion rules to cryptoassets should change the current situation, Burton added.
“In addition, impersonation scams are still a considerable source of scam activity in the UK and are still unfortunately effective in deceiving people to part with their savings.
“This really is down to the fact that the advertising of financial services online and on social media has not been subject to strict controls, meaning anyone can steal the brand of a well-known financial services firm and use an advert to reach people with a potential scam.
“Online and social media adverts are by far the most common contact method for consumers finding potential scams, according to this data from the FCA.
“While it’s good to see the FCA report that non-compliant paid for advertisements by unauthorised entities on Google has dropped since the implementation of their new financial services advertising policy, it has not gone to zero.
“More needs to be done to protect consumers online, particularly those that are not using Google or any other online platform with its own policy. We are still hopeful that the government will tweak the Online Safety Bill such that paid-for advertising is included in scope of the legislation. Tech companies need to pick up some of the slack in monitoring and preventing financial scams.”