Clone Firms Steal £78m During Covid as FCA Issues New Scam Warnings
Published / Last Updated on 28/01/2021
The Financial Conduct Authority (FCA) has issued a warning to the public as reports of ‘clone firm’ investment scams rise during 2020.
Clone firms are fake firms set up by scammers made to look like a legitimate, authorised financial services firm using the firm name, address and FCA ‘Firm Reference Number’ (FRN) of real companies authorised by the FCA. Crooks will then send sales materials linking to websites of legitimate firms to dupe potential investors into thinking they are the real firm when they are not.
The FCA publishes daily warnings on cloned firms with £78m stolen in 2020 during the pandemic and an average loss to victims of £45,242. In research, the FCA found that 75% of investors felt confident they could spot a scam. However, 77% admitted they did not know, or were unsure what a ‘clone investment firm’ was.
Look out for basic ‘clone firm’ scam signs. The FCA suggests:
- Reject unsolicited investment offers whether made online, on social media or over the phone. Be wary even if you initiated contact.
- Always check the FCA Register to make sure you’re dealing with an authorised firm and check the FCA Warning List of firms to avoid.
- Only use the telephone number and email address on the FCA Register, not the contact details the firm gives you and look out for subtle differences.
- Consider seeking impartial advice before investing.
Others things to watch for:
Investments and pension funds are regularly touted with high returns and invested in unusual areas such as overseas developments, property and hotels (we once saw a new Goods Port in Spain with plans for harbour, freight train terminals and more), renewable energy bonds, parking projects, storage units and even forestry.
If you see things like ‘free pension review’, ‘pension liberation’, 'loan’, ‘cashback’, ‘release pension before 55’ then be warned. If you do not understand as it is a complex investment or investing in an unusual but ‘up and coming’ headline development area such as green energy, then be careful and get independent advice.
If you experience ‘cold calls’ out of the blue or high pressure repeat calls and texts then alarm bells should be ringing.
Steps to Check
Talk the FCA and check out both Scamsmart and Action Fraud.
Talk to a regulated independent financial adviser BUT only do this by first asking for and then checking their FRN number on the FCA Register and then contact the firm using the number or email address published on the FCA. website.
Check with HMRC with regard to pension transfers. All pension schemes in the UK are issued a PSTR (Pension Scheme Tax Reference) number to verify that any pension scheme you may be transferring your pension to is an approved/authorised pension scheme with HMRC.
Useful Links:
FCA Register: https://register.fca.org.uk/
Scamscart: https://www.fca.org.uk/scamsmart
Scamsmart Clone Firm Warning List: http://www.fca.org.uk/scamsmart/warning-list
Police (Action Fraud): https://www.actionfraud.police.uk/
HMRC Pension Schemes: https://www.gov.uk/government/organisations/hm-revenue-customs/contact/pension-scheme-enquiries
