Group warns of sophisticated scam targeting private investors

Consumers are being warned about a wave of new sophisticated scams by organised crime groups who are impersonating credible investment firms and offering attractive rates to interest-starved savers hit by the Covid-19 crisis.

The Investment Association, which represents 250 fund managers with £7.7tn under management, said organised criminals had already stolen £4m from private investors by cloning popular brands and peddling fake documents and products, particularly investment bonds. Some of the products have been promoted through fake price comparison websites, while other victims have been attracted by links found on Google and Facebook.

In some cases, criminals have set up email addresses in the names of genuine staff members at the investment firms they are impersonating, and have harvested personal data from consumers by setting up fake call centres.

The association said members had reported nearly 300 incidents of this kind of fraud to authorities this year, the bulk of which took place during the Covid-19 lockdown and since UK interest rates were cut to a record low of 0.1%. The scams have have drawn in savers concerned about losing their usual quarterly interest payments after the historic drop in rates.

“During this time of great uncertainty, serious organised criminals have ratcheted up their operations and are increasingly ruthless in their mission to steal from investors,” IA chief executive Chris Cummings said. “Our industry is determined to counter this threat, and will continue to work closely with the police and regulators to bring an end to these scams.”

Investment firms are urging the public to be vigilant by looking through the details on contracts they receive. In some cases, bank account details are not in the name of the cloned investment management firm. Consumers should also be cautious if they receive cold calls or face pressure to invest in a specific timeframe, which is often a red flag.

Retail investors can also check the FCA’s live scam page, which helps consumers confirm whether they are dealing with an identified scam.

“Fraud and scams come in many different disguises. That’s why today we urge savers and investors to be as vigilant as possible to protect their investments and think very carefully about the risks criminals pose to their financial wellbeing,” Cummings said.