A third of over 75s targeted by investment scams, as FCA urges consumers to take the time to check

The Financial Conduct Authority (FCA) is urging over 55s to take their time to check that investment ‘opportunities’ are legitimate before they hand over their money. This comes as new research by the FCA reveals a fifth (22%) of over 55s, with above average incomes, suspect they were targeted by a fraudulent investment scam in the past three years, rising to a third (32%) of those aged 75 and over.

On average, victims of investment fraud lost £32,000¹ ;each last year. Recent pension freedoms and low interest rates offering poor returns on savings are making over 55s an increasingly attractive target for fraudsters. The new research is part of the FCA’s ScamSmart campaign, helping to protect consumers from investment fraud. The campaign features an interactive tool, the FCA Warning List, that helps investors find out more about the risks associated with an investment, and check a list of firms the FCA knows are operating without its authorisation.

Despite the high number of people potentially contacted by these scams, one in eight (14%) of over 55s who have invested in financial products (such as stocks and shares) spend little or no time researching them before handing over money. Over 75s, who are most likely to say they have been contacted by an investment scam, are also the group most likely to do little or no research (26%)². The most common check carried out before investing in a financial product was to look at a company’s website (41%). However, investment fraudsters and unauthorised firms are known to create highly professional-looking websites to entice victims, reinforcing how other checks need to be done to make sure an investment is genuine. Far fewer (27%) sought professional, impartial advice, a check the FCA encourages consumers to do before investing. 

Interestingly, more time and effort was being spent checking other high cost purchases, even though the money being spent is less. The average cost of major building work in our survey was £25,000, compared to the average of £36,000 spent on financial investments such as stocks or shares. Despite this, significantly more people (47%) said that they researched building work carefully and extensively, compared to those researching financial investments to the same extent (38%).

Over half (55%) of those who have invested in financial products did so on their own, rather than making the decision with family. This is more than any other major financial decision listed such as buying a house, a car or a significant holiday. Fraudsters will often encourage their targets to keep the investment a secret to avoid friends and family dissuading them from investing.

To avoid being a victim of investment fraud, the FCA advises consumers to, at the very least:

1. Reject unsolicited contact about investments.
2. Before investing, check the FCA Register to see if the firm or individual you are dealing with is authorised and check the FCA Warning List of firms to avoid.
3. Get impartial advice before investing.

Mark Steward, Director of Enforcement, FCA, comments:

“Making a significant financial investment is an important decision - be prudent, do your homework and be especially on guard if contacted out of the blue by someone you don’t know.  Fraudsters are targeting our growing over 55 population because they are more likely to have money to invest. They may pressure you to make a quick decision or try to make you feel stupid for not taking up their bogus offers.

“No investment decision should be rushed. Be sceptical. Be suspicious. Ask questions and get answers you can verify. And remember, if you receive an unsolicited call about an investment opportunity that sounds too good to be true then it probably is. The best thing to do is hang up.” 

Nick Hewer, who is supporting the campaign, added:

“Duped by cold-callers, fake websites and online adverts, I am outraged at the persistent threat investment scams pose on society, especially those over 55 who are the prime target for these callous criminals. I have been targeted by these scammers myself so I’m  not surprised to see how many other people have also been approached. The amount of money that is being lost by victims is extremely worrying, which makes it all the more important that this issue is tackled.

“If you are contacted by someone offering an investment out of the blue, just put the phone down. The FCA Warning List is a fantastic resource for those who are unsure about an investment offer – in a nutshell, check, check and check again!”

Notes to editors

1. Figures from Action Fraud released in October 2016.

2. Figure based on 42 respondents aged 75 and over who were involved in investing in a financial product in the past 3 years.

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 [1]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 June 2016 to November 2016, the FCA received 2,142 reports of scams or unauthorised firms to its website.

6. From May 2016 to November 2016, the FCA received 216,1660 visitors to the ScamSmart website.

7. All figures, unless otherwise stated, are from YouGov Plc. The total sample size was 1,004 GB adults aged 55+, in social grade ABC1, with a gross household income of £30,000+ and/ or savings of £5,000+. Fieldwork was undertaken between 3rd - 11th November 2016. The survey was carried out online.