The City watchdog today vowed to crackdown on scams springing up from the coronavirus pandemic amid fears the crisis will leave vulnerable consumers more exposed to rip-off schemes.
The Financial Conduct Authority, which regulates 60,000 financial firms, put shielding customers from scammers top of the priority list as it unveiled an annual business plan to tackle the coronavirus crisis today.
Fraudulent activity has so far involved scams such as fake hand sanitiser or mask sales but the regulator fears a second wave of attacks in financial services in the months ahead.
Insurance policies, pensions transfers and high-return investment opportunities, including investments in cryptocurrencies, are seen as particularly ripe areas for scammers.
It said it would crack down on firms who see “see these times as an opportunity for poor behaviour”.
The regulator is planning to launch a £2.3 million consumer harm campaign to warn people of retail investments scams and is working with law enforcement agencies and consumer groups to raise awareness of the increased risk.
FCA interim chief executive Chris Woolard said: “In a matter of weeks, coronavirus has altered the UK’s financial landscape dramatically.
“At times like this it is more important than ever that the FCA leads the way on the protection of consumers, firms and the markets.”
Most at risk are pensioners and savers in the retail investment market, which has responsibility for building up pension pots.
The FCA said these investments were at “significant risk of harm” as the coronavirus crisis’s impact on the stock market could fuel costly decisions like changing to dangerous investment schemes. Consumers who are scammed lose an average of 22 years’ savings, according to the FCA.
“Good cause” scams, where savers are asked for investments to fund the manufacture of personal protection equipment (PPE) or new drugs to treat coronavirus, are also on the rise.
Insurance scams are also likely to rise, with some claims management companies contacting customers about getting money back on cancelled summer holidays or weddings.
The FCA’s annual budget for 2020/21 has risen 5.2% to £588 million from last year, including an extra £10 million for leaving the EU and £10 million for its own transformation plan.
The body is funded by fees on regulated firms but the FCA has frozen fees levied on 70% of firms to give them breathing space.
The FCA is facing its own pressures from coronavirus as it threatens to disrupt long-term business plans. The regulator admitted much of its planning may be out of date and said a further business plan may be required in future.