FCA issues scam alert after £197M lost to scams in 2018
The Financial Conduct Authority (FCA) has issued a warning to investors over investment scams, many of which are connected to unregulated cryptocurrency companies, after unveiling losses totaling £197 million ($254.6 million) in 2018.
According to figures from the FCA, the UK’s chief financial regulator, the average loss to investment scams in the year was £29,000 ($37,480), with 54% of victims contacted by online sources. This represents an increase from 45% in the previous year, driven largely by growth in the number and scale of scams around unregulated forex and cryptocurrency services.
Personal finance expert Alvin Hall is supporting the regulator’s campaign to raise awareness of these types of investment scams. In an FCA press release, Hall said it was becoming increasingly difficult to detect investment scams.
He explained, “The amount lost last year to investment fraud is staggering, over £197 million according to Action Fraud. If my 30 years of experience in investment markets has taught me anything, it’s this—regardless of how confident you are about what you’re investing in, you should also be just as confident you know who you’re investing with. The FCA Warning List is a fantastic resource for smart investors to use to protect themselves from scams.”
Pauline Smith, director of Action Fraud, said the figures show that investment fraud is still prevalent, and an active risk to investors in the cryptocurrency sector.
“These statistics show that investment fraud is a major threat, with fraudsters doing everything they can to manipulate potential victims into making investments. Victims are often coerced or persuaded into parting with significant amounts of money and this can have a devastating impact on their wellbeing and finances,” Smith said. “We are working with the FCA to raise awareness of investment fraud and would urge anyone who is considering in investing to check with the FCA before parting with their money.”
The FCA campaign, dubbed ScamSmart, aims to provide resources to investors to help identify fraudulent investment schemes. In the last year, the FCA has issued scam warnings to over 360 firms suspected of operating fraudulently.
With many crypto businesses still operating in an unregulated environment, these warnings are a well-timed reminder to investors to exercise caution.
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