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FCA sees record number of unauthorised activity reports

Warning-Sign-Yield-Slow-Stop-Danger-700x450.jpgThe 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.

Ponzi schemes ordered to pay £3.4m to investors

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.”

What next in the battle against pension scams?

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.


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There are 2 comments at the moment, we would love to hear your opinion too.

  1. Julian Stevens 11th July 2019 at 1:20 pm

    I appreciate the difficulty any UK regulator is going to experience with nailing offshore fraudsters, unless their location can be identified and it’s within the EU, whereupon the cooperation of that country’s regulator can (hopefully) be secured.

    Basically, though, the best way to tackle scams is increased public awareness of them and the signs to look out for by way of a sustained media blitz.

  2. Taking advertisements on TV and in the press to raise awareness would surely be a better use of taxpayer’s money that those dreadful PPI adverts.

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