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Tom Kean: FCA needs to swoop on Ponzi pension schemes

They say a fool and their money are soon parted. However, surely everyone knows these days, more than ever, your bat senses need to be turned on when it comes to things that seem a little too good to be true?

With this in mind, it was with amazement that I listened to a friend explain the latest “investment” he had made, without running it past his old mate Tom first. My heart sank as he told me exactly why this was not a scam but the best money-making scheme he had ever heard of.

At this point, I was going to mention names but, having looked into it a little more, I am genuinely worried I might attract unwanted attention. Suffice to say, the “notice to investors” on the FCA website should be clear enough that this unregulated offshore Ponzi scheme is a house of cards teetering over the abyss.

The first thing that strikes me as sad is the fact my friend actually believes he will get between 5-10 per cent interest a week. How has he been allowed to think like this?

Then I marvel at how effective search engines are at hiding certain things. Most of the content you can easily see is positive, obviously created by said scheme to fill up early pages to reassure people who might be doing a little digging. This is critical, of course, as the whole scam depends on the pyramid structure lasting as long as it can before imploding. Positive sounding web content will extend a scheme’s life although, to be fair, the FCA warning notice is there at number two.

My natural curiosity then turns to the actual content of websites and marketing material, which would be really quite funny if it did not involve fleecing people. There is an almost total absence of anything substantive and loads of dreadful typos. Anything detailing how it makes its returns is pretty much non-existent.

All the signs are there but this tells me we still have a duty to protect people from themselves. It is not good enough to post passive warning signs on the internet hoping people will see them. What needs to happen is for someone at the FCA to hop on a plane, jump in a taxi and see if the offices in Cape Verde really do exist and are not some random flat on Airbnb (as has been suggested). Real people in the UK are being conned right under our noses, so we simply have to get our hands dirty, I am afraid. But this will not happen.

Nor too, it seems, will the FCA endeavour to liaise with its foreign counterparts and actually think like an international organisation, which is exactly what it needs to be these days. But, alas, our hundreds of millions of pounds of ad valorem fees will not stretch that far, so people will carry on getting diddled.

Ironically, we all know Ponzi schemes actually work, up to a point. Perfectly intelligent people fall for them all the time. That is why we need some kind of financial SAS unit that can actually move in and make that all-important kill.

Tom Kean is director at Thameside Financial Planning

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Comments

There are 6 comments at the moment, we would love to hear your opinion too.

  1. Of course, the biggest UK Ponzi scheme of all is the State Pension Scheme but there is nothing we can do about that.
    Chris Boylan

  2. FCA SWOOP! Since the regulatory system was set up I have never FIMBRA, PIA or the FCA to be able to SWOOP. Read the Leviathan at Large 2000 report which Andrew Tyrie authored. It’s on the internet.

  3. With all due respect to your friend, Tom, as he never sought advice and then didn’t conduct sufficient due diligence on his own, then this is his own responsibility and he should bear the consequences of his naivety.

    I don’t think the FCA has the remit to intervene, even if it were indeed a Ponzi scheme – I’d imagine it’s the police/fraud department that’s responsible. The FCA has enough on their plate dealing with regulated entities alone, and they can’t even get that right. The public should instead be encouraged/educated to deal solely with FCA registered advisers & firms and much of this could be avoided.

  4. I have been in the same situation with a friend throwing his money at a obvious scam….

    That said, the FCA are not there to regulate the unregulated or the unregulated schemes/product that are in abundance !!

    I come back to a point I often make, not only individuals need to be regulated but so do “products”, and I don’t necessarily mean, bottles of wine, art or Ferrari’s but any thing to do with Cash, Property, or Land need regulation.

    All to often we see the FCA looking the wrong way and missing the home goals that just keep hitting the back of the net ….

    Its only half time and the score is -: Scammers Athletic 5 FCA un-United 0

  5. It’s not called “Bitcoin” by any chance is it?

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