Spotting and avoiding financial scams feature in the news a lot. But as scammers become more sophisticated, the number of victims continues to rise.
While many of us think weâd easily spot the red flags, itâs easy to fall victim, especially if youâve got other things on your mind. Reviewing the warning signs can help you avoid scams should you be targeted. In many financial scams, itâs impossible to reclaim whatâs been stolen. It can devastate your long-term financial plans if a scammer is able to get their hands on your savings, investments or pensions. Being vigilant is crucial.
This year the Financial Conduct Authority (FCA) has issued 80% more scam warnings than it did in 2019. Over the last five years, the figure has increased by more than 300%.
One trend among scams is the rise of clone firms. These scammers use the name and details of legitimate financial services firms to dupe victims. With emails that look trustworthy and advertised products that appear legitimate, it can be hard to spot a clone firm. Combined with number spoofing, where a criminal can make it look as though theyâre calling from a different number, they can make you believe youâre speaking to a finance professional.
Since 2015, scams involving an impersonation now constitute 45% of all FCA warnings. As a result, itâs more important than ever that youâre cautious when making financial decisions.
5 steps that can help you avoid scams
1. Be cautious of unsolicited contact
If youâre contacted out of the blue, whether through email, text, social media or a call, be cautious. Cold calling is one of the most common ways a scammer will try to engage with victims initially. Theyâll attempt to build a rapport and lull you into a false sense of security. There is a ban on cold calling in relation to pensions.
Even if youâre expecting to be contacted, donât feel too embarrassed to ask for verification if you have some concerns. Legitimate financial services firms will understand why youâre asking.
2. Always check the credentials of those you speak to
Never hand over your personal details without checking who youâre speaking to. One of the first steps to take is to check the FCA register. This register contains all the firms and individuals that are involved in regulated activities. It will also show you what permissions each firm has and their contact details.
As mentioned above, some scammers will pretend to be from a legitimate firm, so donât just check the register. Verify the contact details and get in touch with the firm using the information on the register directly.
3. Donât rush into making financial decisions
Scammers rely on you making quick decisions without fully thinking through the consequences. They may use high-pressure tactics to get you to make a snap decision, such as time-limited offers or sending documents to be signed immediately.
The financial decisions you make can have a long-term impact on your situation and plans. Take the time to fully understand what your options are and donât feel rushed to make a quick decision. Again, if you need more time or would like to discuss opportunities, a legitimate financial services provider will understand this.
4. Focus on your long-term plans
When youâre approached by someone offering appealing opportunities, it can be tempting to take them. However, keep in mind that if something sounds too good to be true, it probably is. Investment opportunities that claim to be low risk but high return, for instance, are a red flag.
While quick opportunities to increase wealth or access assets can be attractive, understanding your finances and long-term plan can help you spot those that are too good to be true.
5. Speak to us
Speaking to someone else about the offer youâve been made can help you see red flags that youâve previously overlooked. This may include a partner or someone else you trust. Another pair of eyes can help you identify a scam.
As well as loved ones, as your financial planner, weâre here to offer you support when making financial decisions too. If youâre approached with a financial opportunity, whether a âfree pension reviewâ or a high return investment, you can contact us to discuss this. Weâll help you check that itâs a legitimate opportunity as well as reviewing how it fits into your wider plans.
If you have any concerns or would simply like to review your financial plan, please get in touch.
Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
