Find out how scams involving unregulated investment products work, how to avoid them and what to do if you are scammed.
In the UK, a firm must be authorised and regulated by the FCA to do most financial services activities.
Most firms involved in the sale of unregulated products are not authorised or regulated by us.
If you don’t use an FCA-authorised firm, you also won’t have access to the Financial Ombudsman Service or Financial Services Compensation Scheme (FSCS) so you’re unlikely to get your money back if things go wrong.
Even if a regulated firm is involved, our rules generally apply only to products designed for the general public, rather than ‘niche’ investments, which may be completely unregulated.
Sometimes collective investment schemes (CIS) sell unregulated products – and a firm must be authorised by us to promote or operate a CIS in the UK.
In these cases, we may be able to refer it to Trading Standards, the Corporate Complaints Team at the Department for Business, Energy, Industrial Strategy (BEIS) or the police.
Investments involving unregulated products, particularly if sold through unauthorised firms, are risky and may be a scam.
These products are not currently regulated by the FCA:
- binary options
- international forestry
- land for development
- land overseas
- overseas agriculture
- precious metals
- student accommodation
- sustainable energy
- UK forestry
How unregulated product scams work
Investors are often called out of the blue, but contact can also come by email, post, word of mouth or at a seminar or exhibition.
There will usually be pressure to invest quickly or returns that sound too good to be true.
Scams are often based outside the UK but claim to have a UK presence, often a prestigious City of London address.
Scam firms often suddenly close investor’s trading accounts, refusing to pay back their money.
How to protect yourself
- Avoid unsolicited investment offers, especially cold calls.
- Check the FCA Warning List to make sure you’re not dealing with a known scam.
- Always be wary if you’re pressured to invest quickly or promised returns that sound too good to be true.
- Get impartial advice from an independent financial adviser – never use an adviser from the company that contacted you, as this may be part of the scam.
- Check Companies House to see if it’s registered as a UK company and for the names of directors – many have a chequered past and there may be information about them online.
- Check investment web forums – people often post concerns about firms or investments.
If you have been scammed
If you have already invested in a scam, fraudsters are likely to target you again or sell your details to other criminals.
The follow-up scam may be completely separate or related to the previous fraud, such as an offer to get your money back or to buy back the investment after you pay a fee.
If you have any concerns at all about a potential scam, contact us immediately.