Over 55s at heightened risk of fraud, says FCA

FCA urges caution as study reveals increasing risk of retirees being scammed via investment fraud

Low interest rates cited as a key driver as investors seek higher returns

Over 65s with savings in excess of £10,000 three and a half times as likely to fall victim to investment fraud

More than a quarter of over 55s falling victim to investment fraud are scammed via an unauthorised firm selling unregulated products, such as wine, diamonds and land

TV presenter Nick Hewer, who is supporting the campaign, warns that those at risk should be wary

The FCA is urging retirees to take the necessary precautions before making investments, in a bid to help combat widespread investment fraud.

A study, published today by the regulator, reveals that the current low interest rate environment is one of the key reasons over 55s are considering investing in a wider range of unfamiliar types of investment products.  Among those contacted by a firm they hadn’t heard of in the last 12 months, 4 in 10 (40%) reported a sharp rise in the volume of unsolicited investment calls - the most common tactic used by investment fraudsters.

Part of the FCA’s ScamSmart campaign, to help protect investors from investment fraud, the study revealed 4 in 10 (41%) have moved money out of savings into investments as the sustained period of low interest rates has seen over 55s adopting riskier investment behaviour in a bid to get a better rate of return. Of those questioned, over a quarter (26%) chose to invest in unregulated investment products and 23% say they are considering investing in unfamiliar types of investments in the future. Over a quarter (27%) of those who have fallen victim to investment fraud did so having bought an unregulated product through an unauthorised firm.

Previous FCA research found that those over 65 with savings in excess of £10,000 were three and a half times more likely to fall victim to investment fraud, compared with the wider population. Those living in London, the Home Counties and the South East are most at risk.

When questioned, a fifth (22%) of retirees holding unregulated products revealed they have invested more money into unregulated products over the last year than ever before, with 3% investing as often as once a month. Those considering investing in unregulated products in the next 12 months indicated that they would invest an average of over £4,000, with land, wine and art as popular investment choices.

13% of those questioned were unaware that unregulated products bought through an unauthorised firm offered no protection from the Financial Ombudsman Service or Financial Services Compensation Scheme, if things go wrong. Despite the risks, nearly half (48%) of those investing in unregulated products through unauthorised firms do so without getting professional advice or checking publicly available investor information, such as the FCA’s Warning List.

The FCA is urging investors to exercise caution when they are approached by unauthorised firms selling often high risk investment products.

Mark Steward, Director of Enforcement at the FCA commented: 'You don’t need to be gullible to lose money to a scam or fraud. Fraudsters target financially sophisticated people too, who often don’t like to ask what might sound like silly or basic questions.

'If you are contacted out of the blue about an investment opportunity that sounds too good to be true then it probably is. We would urge you to be sceptical.

'Be sceptical. Be suspicious. Ask questions. Do your own checks before investing; check the FCA ScamSmart website, the FCA warning list and the FCA register to see if those that are asking for your money are the real deal. If you do experience investment fraud or suspect it, report it; our research found that 60 per cent of those that have experienced investment fraud have not reported it, so the problem could be greater than we know and by reporting it you are helping us to protect others.'

Nick Hewer, who is supporting the campaign, added: 'We should all be outraged at the lengths that callous and criminal investment scammers will go to cheat people out of their money. Scammers are embedding themselves into people’s lives and pretending to be close friends of their targets, frequently the elderly and those living alone, before draining their life savings on a false promise of great returns through bogus investments. The tactics that these criminals use are very, very sophisticated; they could suck in even the savviest of investors, something that everyone should be aware of.

'I too have been targeted by unsolicited calls from scammers and would advise that if you ever receive a call offering you the investment of a life time, just put the phone down, as I did. Go by the rule that if it sounds too good to be true, then it probably is. If the investment was that good, everyone would be investing; if you are still in two minds, go to the FCA website and check the Warning List. My best advice: when you receive a cold call – just put the phone down.'

The report also reveals that over 55s are receiving a higher volume of unsolicited calls from unauthorised investment firms, with those being contacted by firms they had not heard of reporting a 40 per cent increase in unsolicited contact. Three in ten (32%) retirees reported being contacted by a firm offering investments in the last 12 months with nearly 4 in 10 (37%) being contacted as many as three times.

Unsolicited contact including cold calls, post and emails are the most common techniques used by investment scammers, in fact just under half (47%) of those who have experienced investment fraud made their investment following unsolicited contact.

The FCA Warning List details firms and individuals that the FCA knows is operating without its authorisation. The web tool helps members of the public find out more about the risks associated with an investment opportunity and find out how to avoid investment scams.

Be a ScamSmart investor

  • Investment fraud is often sophisticated and very difficult to spot.
  • Fraudsters can be articulate and appear financially knowledgeable.
  • They have credible websites, testimonials and materials that can be hard to distinguish from the real thing.
  • Get the tools to spot investment scams:
    • Reject unsolicited contact about investments
    • Check the FCA Warning List
    • Get impartial advice

Notes for editors

  1. Research completed by YouGov between 29th February and 7th March 2016 among 2,301 UK residents over 55.
  2. Additional research carried out by the FCA ‘A quantitative analysis of victims of investment crime’, published October 2014. The FCA commissioned Experian to carry out an analysis of the geographic, demographic and socio-economic profile of victims of investment fraud using 11,359 individual records. This provided us with an understanding of which individuals are most vulnerable to investment fraud. The different types of investment fraud captured in the data included share fraud, recovery fraud, pyramid schemes, as well as carbon credits, fine wines, rare earth metals and land banking..
  3. On 1 April 2013, the FCA became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).
  4. The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers. 
  5. From January 2015 to December 2015, the FCA received 8,507 reports about potential unauthorised activity. We have published warnings about 147 unauthorised firms targeting UK consumers and appointed investigators in 23 cases.
  6. Find out more information about the FCA.