Find out how scams involving unregulated 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.
If you use an unauthorised 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.
If you use an authorised firm, access to the Financial Ombudsman Service and FSCS protection will depend on the investment you are making and the service the firm is providing. Even if an authorised 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 tend to be high risk and may not be suitable for retail customers. See How to protect yourself below.
We receive many reports of investment scams involving unregulated products such as:
- 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 scams are increasingly promoted online. 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.
How to protect yourself
- Reject unsolicited investment offers. Chances are it’s a high-risk investment or a scam.
- 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.
- 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.
- You should seriously consider seeking financial advice or guidance before investing. You should make sure that any firm you deal with is regulated by us and never take investment advice from the company that contacted you, as this may be part of the scam. The Money Advice Service has information on investing and about how to find a financial adviser. Alternatively, you could get further information from a group that represents advisers such as PIMFA. Read more about how to find an adviser.
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.