The FCA is warning the public to be vigilant protecting themselves from online investment fraud, with figures showing investors lost an approximate daily amount of £87,410 to binary options scams last year.
Latest data from the FCA’s Scam Smart campaign shows the kind of investor being targeted by online investment scams is changing.
The regulator says those under 25 were six times (13 per cent) more likely to trust an online investment offer made via social media than people aged above 55.
The data shows more than one in five (23 per cent) survey respondents say online customer testimonies and reviews increase their trust in an investment company.
A further one in 10 (11 per cent) say they wouldn’t conduct any of the listed checks at all, such as checking whether the firm was regulated by the FCA or registered with Companies House, before parting with their money.
FCA director of enforcement Mark Steward says: “As people have become more sceptical of investment-related cold calls and consumer habits have changed, we have seen investment fraud moving online and to social media.”
He adds: “While their websites and profiles appear to be professional, they are all too often run by fraudsters who fix prices and pay-outs.”
Hargreaves Lansdown policy head Tom McPhail says investors need to be savvy on recognising unregulated firms.
He says: “The whole investment community including legitimate firms, the regulator and investors themselves must remain alert to the risk of fraudsters trying to separate ordinary people from their hard-earned cash.”
On 3 January, binary options became a regulated investment product, which means all firms trading in these products need to be FCA authorised.
The regulator has since published a list of 94 firms without FCA authorisation that it understands to be offering binary options trading to UK consumers.