Could You Spot a Fake Financial Adviser? 7 Warning Signs to Watch For

Could you spot a fake financial adviser?

Financial scams are becoming increasingly sophisticated. Spotting a fake financial adviser is more challenging than ever before.

Fraudsters can create convincing websites, emails and social media profiles. They can even pretend to work for genuine financial advice firms, imitating a fake financial adviser in the process.

One scam the Financial Conduct Authority (FCA) warns about is the clone firm scam.

This is where criminals copy the details of a genuine authorised business and pretend to be that firm.

The FCA’s warning list continues to feature new unauthorised firms, including businesses identified as clones of genuine firms.

So, could you spot a fake financial adviser?

Here are seven warning signs to look out for.

1. You are contacted out of the blue

Be particularly careful if someone contacts you unexpectedly about an investment or financial opportunity, as it could be a fake financial adviser attempting to scam you.

This could be by phone, email, text message or social media.

The FCA warns that scammers can contact people through different channels, including after they have searched online for investments or other financial products.

An unexpected approach does not automatically mean it is a scam. However, it should make you more cautious.

2. The company appears to be FCA authorised

This is where clone scams can become particularly convincing.

Fraudsters may use the name, address and Firm Reference Number of a genuine financial advice firm.

They may also create a website that looks almost identical to the genuine firm’s website.

The FCA says scammers can even provide genuine company details but substitute their own telephone number or email address.

So simply checking a firm’s name is not always enough.

3. You are promised high or guaranteed returns

Be very cautious about investments promising unusually high or guaranteed returns.

Investments involve risk, and legitimate financial advisers should explain those risks.

Fraudsters may use attractive returns to encourage people to transfer money quickly.

If an opportunity sounds too good to be true, it deserves further investigation.

4. You are pressured to act quickly

Scammers often want you to make a decision before you have time to think.

You might be told that an investment opportunity is limited or that you need to act immediately.

A genuine financial decision should not normally require you to hand over your money without carrying out proper checks.

Taking your time can give you the opportunity to verify who you are dealing with.

5. The contact details don’t match

This is one of the most important checks you can make.

Read about the launch of the FCA Firm Checker

The FCA recommends using its Firm Checker to check that a business is authorised and has permission to provide the service being offered.

However, don’t simply rely on contact details provided by the person who contacted you.

Check the firm’s details independently and contact the genuine business using the information shown on the FCA’s register.

6. You are asked to transfer money somewhere unusual

Be cautious if you are asked to send money to an unexpected bank account or another organisation.

This can be particularly concerning if the payment details change during the process.

Before transferring a significant amount of money, independently confirm where the money is going and why.

7. You cannot find the firm or its permissions

Almost all firms providing financial services in the UK must be authorised or registered.

The FCA’s Financial Services Register provides information about authorised firms and their permissions.

Importantly, being listed does not automatically mean every investment or service offered by a firm is authorised.

You should check that the firm has permission for the specific service you are being offered.

How can you protect yourself?

Before dealing with a financial adviser or investment company, carry out your own checks.

Use the FCA Firm Checker and make sure the firm’s name, website, telephone number and other contact details match.

Don’t rely solely on a link or telephone number provided by someone who has contacted you.

If you are unsure, stop and investigate before handing over any money or personal information. Additionally, always ask yourself if you might be speaking to a fake financial adviser before you commit.

The FCA also maintains a Warning List of unauthorised firms. However, the FCA points out that if a firm is not on the list, this does not necessarily mean it is genuine.

Don’t let a convincing website fool you

A professional-looking website does not necessarily mean you are dealing with a genuine financial adviser. Carefully check for signs of a fake financial adviser when reviewing credentials and details online.

Clone firms can look remarkably convincing.

Taking a few minutes to check who you are dealing with could potentially prevent a serious financial loss.

At Spectrum Independent Financial Services, we believe that clients should understand who they are dealing with and how their financial advice is provided.

If you are ever unsure about a financial approach or investment opportunity, take your time, carry out the appropriate checks and don’t feel pressured into making a decision.

 

 

This article is for information purposes only and does not constitute financial advice. Tax treatment depends on individual circumstances and may change in future. Investments can fall as well as rise in value, and you may get back less than you invest