Nearly a fifth of over 55s targeted by an investment scam do not report it, according to the Financial Conduct Authority (FCA).
Of that fifth, the most common reason for not reporting was not knowing who to report it to. At the same time, 63 per cent said that they would report a suspected scam if they knew which organisation to inform.
In order to fix this and to encourage more people to report fraud attempts, the FCA has launched a campaign, known as ScamSmart, encouraging more people to come forward and let regulators know when they believe they have been targeted by a potential scam.
In 2016 the FCA received over 8000 reports of potential scams. Almost half of reported scam attempts came from people in London, suggesting other regions are much less likely to contact the FCA when targeted.
According to recent findings by the City of London police, the average amount lost to scam investments is £26,000 per victim.
Common scams include bogus investments, such as land banking, which tempt investors with promises of sky-high returns that are simply not worth the paper they are written on. Cold calling and offers of free financial advice are other warning signs that investors should look out for.
The FCA hopes that more reporting of scams will help protect future victims.
‘We are encouraging people to speak out on behalf of their family or local community, just like they would report a crime in their local area,’ said Mark Steward, director of enforcement at the FCA.
He adds: ‘Whistleblowing is absolutely critical in tackling and shutting down suspected scams, and it’s important savers are aware that by reporting dodgy schemes they could make a difference.
When a financial scam is reported to the FCA it is added to the FCA Warning List. At present, the list consists of nearly 4000 firms the regulators encourage investors to avoid.
The FCA recommends rejecting any contact from firms offering unsolicited investments.
It also recommends, before carrying out any investment, checking the FCA Register as well as the FCA Warning List to see if the firm or individual in question has FCA authorisation or has previously been flagged for suspicious activity.
However, while a move in the right direction, the FCA’s new campaign alone is not enough, some argue.
As Tom Selby, senior analyst at AJ Bell, notes: ‘The government now needs to step up and keep its end of the bargain by actually introducing previously announced measures to clampdown on pension fraudsters, including a ban on cold-calling.
‘It now seems increasingly likely that the pension freedoms will reach their three-year anniversary in April next year without these vital protections being in place.’
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