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FSA reveals large increase in ‘cloned firm’ reports

The FSA says it received nearly three times as many reports about cloned firms in 2011 compared with the previous year.

Cloned firms appear to be genuine authorised firms or individuals when in fact they are a separate company with no affiliation to the firm they are cloning.

In 2011, there were 449 reports made about cloned firms compared to 161 in 2010.

The FSA has reported a 19 per cent increase in ‘boiler room’ fraud enquiries in 2011 compared with 2010, however less people invested in such scams compared to the previous year.

Enquiries about share fraud rose from 4,527 in 2010 to 5,401 in 2011 while there was a 7 per cent drop, from 831 to 770, in the number of people reporting they invested in such schemes.

FSA head of unauthorised business Jonathan Phelan says: “A 7 per cent drop in the number of investors might seem small, but in this case it represents 61 people.  Our research shows that the average investor loses around £20,000, so it is possible that around a million pounds in consumer losses may have been prevented.”


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There are 8 comments at the moment, we would love to hear your opinion too.

  1. I guess that’s good news? but how much does it cost to “save” £1m is surely the next logical question…

  2. Dominic – if the FSA had any idea whatsoever about how to conduct a cost/benefit analysis then RDR would have remained a figment of someone’s imagination. Indeed, if the government had any idea about costs versus benefits then the FSA would not exist and neither would most of the quangos that rule our lives.

  3. Re Dominic 12.32 The answer is a figure you could only dream up if you were an unaccountable government quango! Where`s the MAS when you need them?

  4. Completely agree with Bill Wells, they do not have a ‘Scooby Doo’. And now I hear Lord Turner’s on the shortlist for Mervyn King’s job,

    You really couldn’t make it up. And nor do we need to!

  5. “I guess that’s good news? but how much does it cost to “save” £1m is surely the next logical question…”

    A lot…but for once I think that the FSA are doing something positive about this – they have helped save many investors from being defrauded / duped so I do think the FSA needs to be commended here – even though it pains me to say it.

    Also – how do we go from bolier room scams to RDR??

  6. An interesting set of numbers. In an industry that tends to talk in billions and trillions, £1m would barely pay for the champagne.
    However, there is a whole set of information missing here. The FSA talk about the frauds reported and the number of people defrauded. There is nothing in the article that indicates that the FSA had any function in the decrease other than as a reporting agency.
    Did their presence as a regulator make a difference or is it pure co-incidence? And is it co-incidence that the reported saving approximated to Saint Hector’s remuneration package?
    It does seem strange that only 770 people invested in such schemes out of a potential investing population of around 40m. If the level of gullibility is so low then one wonders about the purpose of the Regulator. For example, pay out the £1m in compensation and there would still be £550m in kitty if the FSA did not exist.
    It has been said before but bears repeating – Parliament really should be looking at the cost/benefit the FSA represent.

  7. Just to put this in perspective The FSA report an increase in these schemes then a decrease in investors to such schemes ?

    Could it be that they are still doing a poor job and the reduction in investors just highlights less people have the money to invest ?

    Still they can use the excuse they are to busy looking at RDR to notice the planes falling out of the sky behind them !!!

  8. And the FSA concentrates more on micro-managing and clobbering decent and honest firms, but the dishonest firms continue to increase.

    Good job lads: give yourselves a bonus!

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