The FCA has seen a record number of reports to its unauthorised business department about potential unauthorised activity in 2018/2019.
The regulator registered 16,600 such reports, up 25 per cent from the year before, according to its annual enforcement annual performance report published this week.
Subsequently the FCA was forced to issue 521 warnings about unauthorised firms, up from 328 in the previous year.
The FCA attributed the record number to higher awareness among consumers following its campaign, and higher level of sophistication of methods the scammers use.
In the report it states: “We attribute this increase to two main factors.
“Firstly, the ongoing success of our ScamSmart campaign – more consumers recognise potential investment scams and know how to report them.
“Secondly, the proliferation of fraudulent online trading platforms, generally based outside of the UK but targeting UK consumers.
“These platforms offer fast trading and high returns. They use social media to target investors and present themselves as a natural, more sophisticated, progression to online gambling.”
The high profile collapse of FCA-authorised firm London Capital and Finance this year attracted attention of consumers. LC&F, which was also conducting unregulated activity, defaulted in January, leaving more than 11,500 investors with a total loss of £237m.
Regulatory consultancy BDO head of Fintech in the financial services team Matt Hopkins says: “The FCA is sharply increasing its targeting of illegal, unregulated products and unauthorised firms that target unsophisticated retail investors.
“Retail investors are being increasingly targeted through social media often with unauthorised firms masquerading as authorised. The FCA is determined to stamp that out. We would expect them to be increasingly proactive in the year ahead.”
Hopkins adds: “Misselling and appropriateness of products for retail customers of regulated firms will also be a major focus of the year ahead. The retail customers’ understanding of innovative products and a sometimes misplaced belief in FSCS protection is the responsibility of the authorised firm to address.
“The FCA will take a hard line if they think firms are not being clear over what the FSCS will and won’t cover.”
The FCA says that the overall number of enforcement cases it is undertaking is up 31 per cent over the past year to 650. At the start of 2019 the figure stood at 496.